Pound to Be Left to Its Fate

by Dave Keating | December 15, 2008 at 01:11 am

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As the pound continues to plummet, the UK government has announced it will not take steps to prop up the currency and stop its fall. It is expected that shorlty one pound will be worth one euro.

The current government is likely wary of repeating the mistakes made by John Major's government in the early 90's, when a rush to prop up the pound led to 'Black Wednesday,' when the pound collapsed and the UK was forced to leave the European exchange rate mechanism. That disaster eventually led to the Conservatives being voted out of office.

The plummeting pound will not be propped up by government intervention, ministers declared yesterday, as it emerged that they will simply hope Britain's beleaguered currency stabilises as broader measures to stimulate the economy begin to take effect.

Sterling has fallen to a series of record lows against the euro in recent days, and looks set to reach parity with the single European currency for the first time. Its fall has hit holidaymakers as well as the thousands of Britons living on the Continent, who have seen the value of pensions and savings plummet.

But ministers have made it clear no help will be forthcoming to stabilise sterling. The Europe minister, Caroline Flint, confirmed the value of the pound was not a "first-order issue" and Yvette Cooper, Chief Secretary to the Treasury, said bolstering the currency had never been the Government's aim.