Blame QE, not Brexit

Since June, Remoaners have been relishing the fall in the pound, blaming it entirely on Brexit. They’ve been joined by a band of rogue traders trying to cash in, claiming they’re ‘forced’ to increase their prices.

Little attempt has been made to look at how the exchange rate has moved in recent years and examine other contributory factors.

Between 2009 and 2014, the pound was worth around the $1.55 mark, with a low of $1.44 in May 2010 and high of $1.72 in July 2014. it then fell to about $1.41 by 2016.

The pound’s fall by 18 per cent from July 2014 to January 2016 didn’t arouse the frenzy we’ve now been seeing.

The steady fall since 2014 began when the US stopped its quantitative easing programme and started to push up its bank base rate, strengthening the dollar.

economists know you can’t keep printing money without affecting the value of the currency, especially if other major economies have ended their Qe programmes.

But the Bank of england has injected about £480billion into the economy via Qe, most of which has gone into growing a new housing bubble and consumer credit, representing about 25 per cent of the UK’s annual GDP.

cutting the base rate and starting Qe were emergency measures in the wake of the 2008 financial crisis. With the Bank of england still pursuing the same policies eight years later, it is no wonder markets have lost confidence in sterling. Qe has effectively devalued the pound by stealth.

it’s surely time for a change of monetary policy or a change of Governor of the Bank of england.

A. WYLLIE, Ayrshire.