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Mervyn King says sterling fears are ‘over the top’

Mervyn King 440

Former Bank of England Governor Mervyn King says fears over the pound’s “flash crash” last week are “over the top” and that sterling weakness is a welcome change for the UK economy.

Last week the pound fell from $1.26 to $1.14 within a couple of seconds before rising to $1.24, prompting the Bank of England to examine what had caused the sudden drop.

But King told Sky News: “The whole thing has generated reactions which are over the top.”

King says the economy was slowing before the vote and that the UK was “in a position where the rest of the world is not offering us much help”.

“So from that point of view the fall in sterling is a welcome change.”

While King says Brexit is “not a bed of roses” he says it would not be the end of the world.

“During the referendum campaign, someone said the real danger of Brexit is you’ll end up with higher interest rates, lower house prices and a lower exchange rate, and I thought: dream on.

“Because that’s what we’ve been trying to achieve for the past three years and now we have a chance of getting it.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Hopefully this will shut some of the remoaners up. For a while at least.

  2. Sterling fears over the top?
    Then please explain how our exports will prosper when we have to pay considerably more for the raw materials used to produce these items. How are we better off when our fuel prices, which are priced in dollars, go up? Our food? We have a huge balance of payments gap – we import 36% more than we export. All the imports will get dearer with our sinking currency. Please explain how that is a good thing.

    One of the biggest export sectors is Gems and precious metals (11%). Terrific business that is. We import dear and sell cheap. I must have read the wrong economic textbooks.

    Sure the stock market is up, but don’t get too happy. The main two reasons are:
    1. The search for income
    2. Foreign investors snapping up UK assets – companies, infrastructure, property and anything else that isn’t nailed down. We own precious little of our own firms as it is, so we will end up owning practically nothing.

    If these experts think that is a good thing then perhaps we need some more detailed explanation.

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