The Crunch Is Here

The value of the pound continues to fall, and nobody knows why,” declared a BBC news bulletin recently, “but there is better news about potatoes.” This memorable sentence nicely captures Britain’s official mood with its blend of alarm, perplexity, resignation, and fatuous optimism.

Crisis has followed crisis as ineluctably as month follows month. Indeed it might be more accurate to say that there has been a continuing, cumulative crisis, and that the value of the pound has fallen steadily except for remissions during which the Bank of England was able to sustain the rate artificially by the curious technique of buying its own money with borrowed dollars; a technique which, apart from being ruinously expensive, is ceasing to work, because foreign holders of sterling merely take advantage of these remissions to unload their remaining pounds.

AL

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Anthony Lejeune

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The value of the pound continues to fall, and nobody knows why,” declared a BBC news bulletin recently, “but there is better news about potatoes.” This memorable sentence nicely captures Britain’s official mood with its blend of alarm, perplexity, resignation, and fatuous optimism.

Crisis has followed crisis as ineluctably as month follows month. Indeed it might be more accurate to say that there has been a continuing, cumulative crisis, and that the value of the pound has fallen steadily except for remissions during which the Bank of England was able to sustain the rate artificially by the curious technique of buying its own money with borrowed dollars; a technique which, apart from being ruinously expensive, is ceasing to work, because foreign holders of sterling merely take advantage of these remissions to unload their remaining pounds.