The scenario invites them to consider the policy that has become once again undiscussable in high political circles, the case for joining the euro. That is why the Conservatives are in even more rigorous denial than the chancellor. The opposition, who should be holding the government to account for potentially the most damaging failure of their economic policy, have nothing whatever to say about the high pound, except that it is high. Short of a total market collapse, a convincing statement that Britain now intended to join the euro has become the only policy likely to bring sterling down. Perceiving that sterling could not enter at its present rate, the markets would assist the lowering of it.
Perception is how markets work.
That is the question. Plainly they do not believe it at the moment, even though entry is the government's stated intention - and was, incidentally, the expectation BMW were entitled to incorporate in their plans for Rover. It's unlikely that anything will become clearer before the election. What is now harder to obscure, though, is the cost that goes with this. It may not be dramatic, though the closure of Dagenham would put into the shade the unbearably petty excitement over when Stephen Byers got to know what BMW were playing at.