JohnRawls wrote:Yeah, well this topic is about the UK and you are defending the UKs position.
What the UK's position? Brexit? Am I defending Brexit? I'm merely stating that one promise of the Brexiteers, namely higher wages due to less immigration, seems to be materializing at least for blue collar workers.
JohnRawls wrote:The Financial services sector won't want to use UK currency for operations if you are going to devalue it. If you do an operation for 1 billion Pounds and all of the sudden that pound is 5-10% cheaper then you are fucked. The reason financial services and bonds and so on are often bought and issued by other countries in Euros or Dollars is because they have a track record of being stable. The gold standard of currencies so to speak. This is also the reason why countries are fucked when Europe and US throw sanctions and don't allow countries to issue bonds or other financial instruments in Euros or Dollars.
"all of a sudden"?
The British pound is fairly stable relative to the other major currencies, or at least no less unstable than the others.
Devaluation is not a problem anyway as long as it's predictable.
Stability is one reason for buying USD, but access to the world's the biggest financial market is arguably the more important one.
The financial services sector is not tied to a particular currency, at least not to the extent its business is international.
JohnRawls wrote:The reason many countries joined the Euro is because it provides monetary stability even knowing the downsides. Investment is one of the most important engines of any modern economy.
I don't think they were fully aware of the downsides at the time. The euro was just as much a political project.
JohnRawls wrote:Ask yourself, why would anyone want to lend UK money in pounds if they will know the currency will get devalued? Does that increase the interest payment perhaps?
Ceteris paribus, yes.