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George Magnus

Economist and Author

George Magnus

Economist and Author

The pound won’t stop plummeting any time soon

By George Magnus Posted on August 29, 2017November 16, 2017 In Europe + UK sterling, UK 0

First published: Prospectmagazine.co.uk, 29/08/2017

And this slump is not stimulating growth—meaning Brexiteers don’t have a leg to stand on

A year ago, Sterling was still worth €1.15. On holiday in Italy these last two weeks, I was aware that my pounds were buying fewer and fewer Euros by the day, and my latest credit card statement shows transactions including handling fees, such that the effective rate I was paying was about €1.05. At one airport on Saturday, I saw the currency exchange rate lit up on a screen at 1:1. A number of currency analysts have lowered their predictions, for what they’re worth, to suggest that the market rate will be parity by the end of the year, meaning that commercial transactions will take place where £1 is worth less than €1. Sterling may be holding its own against a weak US dollar that few analysts expected at the start of the year, but it’s been trashed against the Euro. And still, the Brexit protagonists say this is good news. Is it?

In textbook economics, a weaker exchange rate should boost a country’s competitiveness, making exports cheaper to foreign buyers, and imports more expensive to local consumers and businesses. This should lead to an improvement in the balance of trade and payments, and help to stimulate economic growth. This is what the handful of Brexit-supporting economists insist is truth. Yet the facts speak otherwise….Read more:

 

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China reform plans could be stifled as economy cools
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About

George Magnus

George Magnus

George Magnus is an independent economist and commentator, an Associate at the China Centre, Oxford University, and an adviser to some asset management companies.

He is a regular contributor to the Financial Times, Prospect Magazine and other written media, and appears regularly on BBC TV and radio, Bloomberg TV and other outlets.

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"George Magnus does not look like a prophet. Yet this is the man widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession."

- Josephine Moulds, The Daily Telegraph

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