Brexit speeds 100 years of the pound weakening – EXAME.com

In 1967, British Prime Minister Harold Wilson declared that the devaluation would not diminish the “ pound in your pocket.”

The Minister of Finance UK , Norman Lamont, admitted that heard “singing in the bath” when the connection between the pound sterling and the German mark was eliminated in 1992, which caused a fall of the currency.

If the history is any guide, the sure leader Brexit, Boris Johnson, that the negative consequences of leaving the European Union are “being greatly exaggerated” will also be wrong.

a few ways to trace the fall of the Kingdom Kingdom from the empire are better than their currency. Historians, economists and foreign policy experts point to more than 10 percent decline since the referendum of June 23 as another negative step signal on paper and global influence of the United Kingdom.

“the story of the pound against the dollar in the last century is essentially a downward staircase with large permanent steps,” said Rui Pedro Esteves, associate professor of economics at Oxford University.

a hundred years of devaluation

the oldest currency in the world – the English word “sterling” comes from the old German “ster”, which means “strong” or “stable” – bought almost $ 5 during the First World War. On the day of the referendum on the EU, it was priced at $ 1.50.

The currency reached $ 1.30 for the first time since 1985 on Tuesday. HSBC Holdings Plc analysts are among the design $ 1.20 as probable destination.

Billionaire investor George Soros suggests US $ 1.15, equivalent to about one euro. – About 60 cents below the average since 1971

The pound fell by first time in 1931, after leaving the gold standard, which was overvalued, as in 1944, when it entered the system of managed exchange rates of Bretton Woods. Another devaluation of 30 percent was swallowed up in 1949 and after Wilson issued another crash in 1967 amid problems with the balance of UK payments.

In the 1970s, the IMF was called to help prevent a crisis of the pound but the currency fell back in the early 1980s Britain joined the Exchange Rate Mechanism, a precursor euro in 1990, but was forced to leave after only two years because they could not sustain a connection with the German mark.

Now, it is speculated that life outside the EU will cost the pound its place at the top level of the reserve currencies. Currently, the currency accounts for 5 percent of foreign currency reserves, according to the IMF.

It is possible that a weaker currency does not help much to strengthen the British economy. Although it should boost industrial production and tourism, three quarters of the economy depend on services such as finance and its future is subject to access to the EU that the British government able to negotiate.

As the economy down, the same could happen to the British influence, which affect more pound. EU exit endangers the status of the financial district of London as a world center and carries the risk of undermining the UK’s voice in political forums such as the UN.

“The relevance of the United Kingdom and London as a global center will decrease, “said Ian Bremmer, president of Eurasia Group. “We should not fool ourselves, this is a critical moment. The Brexit is a blow. “