but it wasn't George Osborne

Few people with any sense believed the Prime Mentalist that George Osborne had actually caused the decline in sterling. Apart from anything else it had lost much of the current fall before he spoke, but then Brown can't ignore any opportunity to smear and sneer.

So why has the sterling exchange rate plummeted this year?

There were two reasons;
1) For the past three or four years our balance of payments situation has deteriorated, easily passing the previous record deficits on the Trade Account. This year Eurostat reveals that from January to August the UK had the largest trade deficit of all the 27 countries of the EU, of 82.2 billion euros. During the same period our exports fell by 2 billion euros, or about 1%. It should be said that many other countries recorded an export growth, - Holland 11%, Germany 6%, France 5% (and even Italy the same!). In fact only one other country recorded a fall in exports, - Ireland.

So with so many foreigners receiving sterling from us, over so many years, and wanting it converted into foreign currencies, sterling should have plunged under the forces of supply and demand. That it didn't until now was that many were enticed to leave their export receipts here as sterling deposits, attracted by the relatively high interest rates here. The situation has changed recently, and they have repatriated their money to some degree now.

This brings me to the second reason:
2) People will leave their money on deposit in foreign countries if the interest rate they enjoy is good and if they feel its value is secure. Increasingly this year, with our financial problems and the bungling attempts to deal with them at least until recently, sterling does not seem so safe as it once was.

Interestingly many of the deposits withdrawn were re-deposited in the US. The Americans have also been running deficits, but the dollar was reckoned safer than sterling!! A trickle in a few months became a flood of deposits leaving the UK.

Clearly foreigners and their advisers do not rate Wizard Brown as highly as he rates himself.