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The highly informed readers of ConservativeHome will, of course, recognise 19 November 1967 as a key point in British economic history.
That day Labour Prime Minister Harold Wilson announced the devaluation of Sterling. After months of economic ‘strife’ [strangely it’s a word that does not seem to be used these days – maybe it should be] Wilson cut the value of the Pound 14% from $2.80 to $2.40 at a stroke.
He took to the airwaves with the infamous line: “It does not mean that the Pound here in Britain, in your pocket or in your purse has been devalued.”
It was the beginning of the end of the Sterling Area – and a shot in the arm for Britain’s eventual decision to join the European ‘club’. But more importantly it hugely impacted the Wilson government’s economic credibility at home and abroad.
Government, at that time, seemed to have no control over its destiny and voters seemed resigned to Britain’s continued decline.
Those days of exchange controls are light years away from where we are now. Of course it took a Conservative government in 1979 to abolish them and to start to turn around years of economic malaise.
So watching George Osborne hit the airwaves at the weekend – something he did a lot – the commentariat could not wait to talk of a new, ‘old style’ Sterling Crisis.
Today’s papers are full of a new survey from Lloyds showing how the Pound’s value has lost two thirds of its value since 1982. They is also plenty of punditry on just what the Chancellor must do right now.
Yes – it's true – a lower pound hits holidaymakers and those with second homes. But a weaker pound provides opportunities for exporters. So pain and gain abound.
Sterling’s slide was taking place well before the Moody’s downgrade this weekend. For weeks now the UK currency’s relative status versus improved Eurozone sentiment has been clear for all to see. As the Eurozone has moved out of cardiac arrest territory – the Pound’s relative ‘safe haven’ status has also diminished.
Market sentiment around a UK downgrade has indeed been around for months – but the Government should not deny this is a key moment in its fortunes.
But – usefully – it took place a month ahead of the Budget. This provides significant time to get the politics in the right place.
There is little fiscal room for manoeuvre for George Osborne. The political and economic die is cast for this Parliament. Turning back on Plan A would be disastrous.
But Budget 2013 does provide some real political opportunity. That opportunity is to provide voters with some ‘light at the end of the [economic] tunnel’. A clear vision on just what a Conservative Government would do if elected with a clear majority in 2015.
That means reaching beyond current headlines and Coalition fixes with an overarching vision for British recovery. Resisting the temptation for quick fixes right now.
So policy boldness for a future term, matched with fiscal credibility for now.
This is no time for a mid-term Budget. The lessons of the 1960s and 1970s are clear.
The BBC has been criticised by many on the Right for running Harold Wilson Night on BBC Parliament the other week to celebrate 50 years since he became Labour leader.
I disagree. It was great viewing. With this timely reminder about the master political strategist – I think George Osborne might want to watch it all over again!