Heir to Blair indeed.
I do not have time to fisk the whole nonsense, so let’s consider what would happen to the GBP if (when?) we exit. We should note that Cameron/Osborne comments are pure speculation. The numbers they cite are just fiction. (In lots of ways this sort of lunatic economic soothsaying is what has got us into this mess in the first place.)
Initially there will be uncertainty in the currency markets. (Personally I think that a lot of that is already in the price.). The markets will then take time to work out what is going on. I don’t think that that will take long – financial markets being among the most efficient markets. The markets will quickly realise that we are off the hook for all our contingent liabilities to the EU. These are both massive and we have the true quantum deliberately hidden from us. They will also realise that the government’s finances have been materially improved by about £9 Bn per annum. (I concede that there is a lot of uncertainty as to just how much the EU costs us). This will mean that we can repay our international debts quicker. Although it will take longer (the quangoistas will fight like Hell to hang onto their power and fat entitlements – I fully expect them to argue that ‘now we have left the EU we need more regulation’) the deadweight costs of EU created regulatory burden will be removed from the 55% of our international trade that does not go to the EU and all of it from the 90% of our GDP which is internal. Production costs in the UK will fall. (If the Government had any clue what is was doing it could immediately cut taxes on production and hence create a low tax economy which in turn would immediately cancel out the 4% to 5% external tariff on exports to the EU. Next and crucially we will be able to return to proper supervision of our banks. (As you know I hold that Bank of England is largely incompetent at this and the FCA / PRA totally useless), but we could start to address the structure of bank capital outside the constraints of the EU’s agenda that is to keep itself and the Euro in being come what may, mostly by printing money. The City would profit from this. I also fully expect us to quickly become the largest offshore financial centre on the planet. (As part of this I also fully expect London land prices to carry on rising – but ‘we’ know how to address this, don’t ‘we’)
Overall I expect GBP to rise in relative price.
Which is good because we’ll be able to buy Mercedes cheaper. Question, What will Mercedes do with all those lovely GBP’s? Where can they spend them?
Cameron / Osborne whole scare mongering meme is based entirely on ill thought out speculation and deceit.
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