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.”