Is the British Pound Being Herded to the Cliff Edge?

My guess is close to the next election:-)

According to Fred Harrison’s 18 year property cycle it will be in 2026.
Rachel from accounts is clueles, happy to keep paying for any Tom, Dick or Harry who enters the country illegally, happy to pay for vanity projects abroad and no plan for increasing what we spend on defence.

Or maybe the international markets/investors don’t see things the same way and the garden isn’t exactly rosy elsewhere. There are so many factors at play; the Middle East conflicts, Russia/Ukraine and of course changes in political leadership, and possible trade wars. For the first time in a while I’m feeling more optimistic. I have no economics knowledge but the pound is more than holding up, equity markets are doing well with the Footsie 100 at an all time high, wages are growing faster than inflation (which is now at a much more manageable level than a year or two ago), unemployment levels are stable, mortgage rates are coming down and even my utility charges are decreasing. I am pleased to see that more money is being provided for necessary public services which have been dire and while the budget was unpopular as far as I can see it couldn’t be anything else. For my part I’ve decided to start using my Sipp rather than face the penalties on death so if others like me do the same perhaps the economy will continue to avoid recession and perhaps even grow! Time will tell.

I have been saying just this for years. There is going to come a day of reckoning when the whole UK economy is going to come crashing down.
The Government is going to run out of money. Politicians have for years now been shying away from the fundamental structural reforms that are necessary to bring national income and expenditure into balance. For instance, abolishing the free at the point of delivery health service, means testing the state pension and abolishing a whole raft of welfare benefits such as Child Benefit, Attendance Allowance and PIPS. The Overseas Aid department needs to be abolished too and we need to leave the ECHR.
Unless these painful measures are adopted, the international markets will not tolerate Britain’s economic trajectory where the national debt and debt interest carries on rising. No business and no family could operate in this way so countries can go bankrupt as well.
When governments run out of money they will come for everything you own including your house, car and all your possessions. The National Debt is currently £2.8 trillion whilst the current value of the nation’s housing stock is £9.1 trillion. It doesn’t take a genius to work out where the raid will take place when all other options have been exhausted.
You have been warned!

The truth is every major economy is more or less in the same boat, incl the USA and Japan! There are no clean shirts in the global currency basket.. gold price is showing this! Still time to buy precious metals as fiat currencies get devalued against real money. J.P. Morgan stated in his testimony before Congress in 1912, “Gold is money. Everything else is credit.” Please remember this!

Mark, please can you enlarge on your comment below?

“Is this a case of markets clinging to blind optimism? Or is there something more sinister at play? It wouldn’t be the first time that international economic forces have propped up a currency or economy to serve their own interests, only to abandon it at the worst possible moment.”

Reply to the comment left by Robin Wilson at 18/02/2025 – 21:07
Means testing the health service, and state pension is already effective through income tax bands that have no effect on the service or pension provided.

Likewise Child Benefit is removed for earnings above £50k so working hard means your children are worth less.

Attendance Allowance and PIPS support the elderly care and disability care, so are not a voluntary situation that anybody desires.

The financial markets need to grasp that their risk and profit is underwriten by the taxpayers and that they have benefited from reduced spending on defence and infrastructure that those taxpayers are finally waiking up to the urgent need for.

So government borrowing for defence is an overdue investment that benefits the whole nation especially the markets who need stability to secure their profits. More defence spending is lower risk so should cost government less than operating costs.

What would be the repercussions of such an event?

Reply to the comment left by PAUL BARTLETT at 20/02/2025 – 18:33
Scrapping Child Benefit and the Overseas Aid department would free up £28 billion for both deficit reduction and increased spending on defence. It is shameful that a Conservative government hollowed out the armed services.

I never understood the rationale for Child Benefit. It is not the state’s responsibility to pay for people to have children. In a nation of self reliant people, adults should decide for themselves whether they can afford to have children or not. Only socialists would seek to intervene. In any case, if the rationale was to increase the birth rate, then that has failed spectacularly due to the increasingly ageing population. If there were large numbers of young people entering the workforce to drive the economy forward, it could perhaps be justified. But instead, it is just another state benefit within a welfare budget that is bankrupting Britain.