SIMON WATKINS

READERS with long memories may recall how in 1967, as Britain devalued the pound sharply, the Labour Prime Minister Harold Wilson took to the radio and TV airwaves to declare that the move did not mean ‘the pound in your pocket... has been devalued’.

It was an enormous lie. The pound was devalued against foreign currencies, which meant that any imported goods would be more expensive and that assets in the UK were, as far as the rest of the world was concerned, worth less than before. The cost was real.

A similar thing has happened in the UK post-Brexit. The immediate effect has been that any of us who take a foreign holiday this year will find that we don’t get as much for our money, but a mirror effect can be seen in our stock markets.

Those determined to believe that leaving the EU bears no economic costs have hailed the continuing rise of the FTSE100 and the fact that the FTSE250, the next tier of listed companies, has recovered.

First of all it is vital to look beyond the index figures and to particular companies. The share indices have been boosted by strong gains at global companies that happen to be listed in the UK but which earn their profits in overseas currencies and sell very little here. The global miners like Fresnillo, up 53 per cent since June 23, and Randgold Resources, up 36 per cent, are glaring examples.

These are more than enough to outweigh the sharp falls that have not been reversed in the value of many companies that are much more representative of the UK economy. Lloyds Banking Group shares are still down 26 per cent and Barratt Developments are still down 24 per cent, for example.

Now to the point about currencies. Those rises and falls are in sterling terms, but sterling itself has fallen in value by ten per cent since June 23. In dollar terms, Fresnillo is up a slightly more modest 36 per cent.

Meanwhile, in dollar terms Lloyds is down by 47 per cent and Barratt by 40 per cent. Even at the Index level this effect is evident. The FTSE100 is up 5.8 per cent since June 23 – in sterling. In dollars and euros it is down by almost the same percentage. ‘Who cares?’ I hear some cry. Well, we should all take note. Because what these numbers tell us is that the rest of the world thinks British assets and companies linked to the British economy are worth less than they were before June 23.

This is what the global markets think of the prospects of Britishfocused companies and our economy. It is not Armageddon – and Remain campaigners were foolish to imply that it would be. But it is unequivocally a sign that financial markets have cut their valuation of the British economy. To argue otherwise is simply daft.