The pound is now considerably higher against the euro than it was at the beginning of last year and shows no sign of falling. Against the German mark, the pound is at its highest rate since 1985. So far, this extreme overvaluation of sterling has been tolerated on the grounds that it will not last. But in the last few weeks something has changed. Profit margins can be squeezed and markets cross-subsidised for a while, but not forever.
British products sold abroad are simply too expensive.
Fears are rising that the very high value of the pound will, completely unnecessarily, cause long-lasting damage to local companies and the jobs that depend on them. Business that are perfectly sound will be forced to shut down, causing thousands of jobs to be lost. Government figures show that 107,000 people in the northeast depend on the strength of the manufacturing sector for their livelihood. We have already seen what has happened to Rover, but this is only the tip of the iceberg. The high pound has destroyed more than 250,000 manufacturing jobs across the country since the Government was elected.