GBP collapses against USD as George Osborne goes back on his pledge and caves in to leftist populism. Op Ed
What exactly will it take for Britain’s economists to realize that they must no longer play with fire, and must take a proper and decisive stand against the massive burden on the public purse which not only held back growth over the last 15 years and caused massive national debt, but also spills over into […]
What exactly will it take for Britain’s economists to realize that they must no longer play with fire, and must take a proper and decisive stand against the massive burden on the public purse which not only held back growth over the last 15 years and caused massive national debt, but also spills over into the black hole that is the Eurozone.
When Conservative Chancellor of the Exchequer George Osborne was finally allowed to design and unveil a budget which would really bring Britain’s state of wealth back to true form and further strengthen the pound against its flagging Continental counterpart, investors and traders, along with business owners rejoiced.
Britain’s top quality and leading edge financial sector was being thrown a lifeline of sensibility by George Osborne, who marked himself out as a business-friendly chancellor who wants to encourage the very un-European virtues of free enterprise, whilst at the same time empowering the investing public to follow Margaret Thatcher’s vision of becoming a ‘nation of shareholders’.
The pound rallied against the EUR and USD, and investors as well as financial institutions canned all thoughts of leaving the financial epicenter of London (the city was rife with thoughts of exiting if the socialist Labor party had won, or even if the coalition between Liberal Democrats and Conservative had continued).
False sense of security
Just as everyone was getting comfortable, and the differential between socialist, non-producing, debt-ridden Europe and the prosperous London financial sector with its rapid annual economic growth widened, George Osborne has today dropped a bombshell that has sent the pound into a dive against the US dollar, in a similar pattern to that of the euro.
If I were to analyze this fall in value of both the euro and pound at the same time, I would say that Mr. Osborne, who yesterday admitted that he will not be making the promised welfare cuts, and actually went on a £27 billion spending spree with a windfall that could have been put toward settling some of the external debt.
Unbelievably, Mr. Osborne is going to commit £16 billion to foreign aid by 2020, which is a metaphorical blank check to oblivion.
Those who thought they had finally got a Conservative chancellor who would set Britain on the right track actually got a socialist in disguise, hence the fall of the value of the pound over the last day. If the British government and those responsible for keeping the economy on an even keel do not shake off this inherent hunger for socialism that has risen to popularity among votaries over the last few years, then many will hang onto their greenbacks, and many others will look East.
Will HSBC, Barclays and Standard Chartered re-open their consideration of moving their entire focus to Asia? Now there’s a question.
Charts courtesy of Google Finance.