Remember when devaluations of the pound were a big political deal? No more it seems.
The BREXIT devaluation is hardly being noticed
The pound has fared poorly on the foreign exchange markets since TMay’s speech on Sunday setting out her plans to extract the UK from the EU with the aim to invoke Article 50 in March next year.
From a peak of about $1.50 to the pound on June 23rd it has now fallen below through the $1.30 market and has touched $1.27.
In previous times whenever there’s been such a movement it has created political problems for the government of the day but so far the BREXIT devaluation has barely had an impact. The Harold Wilson government never really got over the 1967 devaluation and was replaced by a majority CON government at the next general election. There’s little doubt the the ERM crisis in September 1992 impacted on Major’s government in a big way and he never really recovered. The Tories lost their reputation for economic competence.
The moves, of course, means that the UK’s export will be cheaper although anything that is bought in dollars or euros will be more expensive. Normally the price of of petrol is sensitive to movements in sterling because the international oil market is priced in dollars.
TMay is currently enjoying a polling honeymoon and it will be interesting to see how long that lasts. She’s very much assisted by the mediocre opposition that she faces from the LAB front bench which is one of the worst I have seen.
She’s got a massive task trying to extract the UK from the EU in a manner that satisfies large parts of her party but also safeguards key British interests such as the city, motor manufacturing and the pharmaceutical industry.
During conference week the party comes first. We’ll see what happens afterwards.