In the run-up to the referendum, it was common for Leave campaigners to compare quitting the EU to Britain’s embarrassing but ultimately beneficial departure from the European exchange rate mechanism (ERM) in 1992. The pound tumbled after “Black Wednesday”, and by 1995 the economy had begun to rocket.
George Magnus, a former chief economist at Swiss investment bank UBS, says there is no question the recent fall in the pound will help some companies, “but it’s most unlikely to offset other economic problems the UK is going to encounter”.
He says that, unlike in the 1990s, the pound is not starting from a “chronically overvalued” position.
Hmm, OK, and the proof of this is what?
As if this wasn’t bad enough, the UK’s balance of payments deficit of 7% is three times as big as it was before the ERM exit.
Well, we don’t have a balance of payments deficit because the balance of payments always, by definition, balances. We have a trade deficit.
And a large trade deficit is one of those signals that a currency is over valued, isn’t it?