The letters on “weighing up sovereignty and sterling” (1 February) consider the power of the market only in passing. Since the Great War, the economic history of the pound shows the limitations of political influence.
One recalls the “economic consequences of Winston Churchill in the 1920s returning to the gold standard. Or Margaret Thatcher’s experiments with monetarism, which tried to manipulate the money supply to control inflation. Not forgetting, of course, pegging the pound to the Deutschmark, leading to the humiliating European exchange rate mechanism debacle. Moreover, contemporary history of the global crash shows how inventive financial markets are in evading regulation. Isn’t there still a propensity for neo-liberal policies – “you can’t buck the market” – among some politicians?
Despite the vagaries of the euro over the past decade, the pound has still depreciated 27 per cent. Arguably any “weighing up of sovereignty and sterling” must take into account the importance of markets.
Old Chapel Walk