The Sterling Crisis

The catastrophe of Gordon Brown's response to the recession is becoming clearer by the day. By boosting public spending, he has shattered international confidence in the UK economy, and the predictable result has been a flight from sterling. There is a strange idea around that this is somehow good for the British economy. However, it is looking more like Robert Mugabe economics - let's call it Mugabenomics - every day. Printing money and devaluing the currency isn't the answer. Just take a look at what is happening to the Hugh Street. A whole string of retailers are going out of business - Woolworths, Whittards, Officer's Club, Adams - because most of the stuff they sell is imported. It's soaring in price, but they can't increase what they charge, so they are shutting down. The damage that does to the economy far outweighs any boost from the fiscal stimulus. In my Bloomberg column today, one of my predictions for 2009 is that Britain will have to call in the IMF - and that is looking more and more accurate all the time.