Ex-Bank boss welcomes pound plunge

FORMER Bank of England Governor Mervyn King last night said the plunge in the pound since the Brexit vote was a ‘welcome change’ for the UK economy.

In a dramatic intervention, Lord King also turned his fire on those who forecast economic catastrophe and said leaving the European Union was nothing to fear.

The comments were in stark contrast to the doom-laden warnings of Remain campaigners and others before the vote, including former Chancellor George Osborne and current Bank governor Mark Carney. It came on another brutal day for the pound following last week’s ‘flash crash’ which pushed sterling to a fresh 31-year low against the US dollar and sent shockwaves through financial markets around the world.

Sterling fell to as low as $1.2355 yesterday – taking its losses since the Brexit vote to nearly 17 per cent.

There are signs that the fall in the pound has helped prop up the economy by boosting exports and tourism and making the UK more competitive on the global stage. Speaking to Sky News in New York, where he is teaching, Lord King said: ‘The economy was slowing somewhat before the vote and we are in a position where the rest of the world is not offering us much help. So from that point of view the fall in sterling is a welcome change.’

He said the reaction to the Brexit vote – including warnings of a sterling crisis and recession – has been ‘over the top’.

‘I don’t think we should fear [Brexit],’ he said. ‘It’s not a bed of roses, but nor is it the end of the world.’

Lord King, who was governor from 2003 to 2013, including during the financial crisis, has previously said the Treasury’s dire warnings about the impact of Brexit left him ‘baffled’. He has also spoken out against the ‘scaremongering’ during the campaign.

David Cameron warned a Brexit vote would put ‘a bomb under the economy’ and Mr Osborne claimed there would be an ‘ immediate and profound’ shock and ‘ DIY recession’. Mr Carney also claimed there could be a recession.