by Bernard Connolly
Note from the editor-in-chief:
Everyone with financial assets in the UK and everyone voting in tomorrow’s referendum should read the article by Bernard Connolly we are posting below. Bernard is the legendary economist who resisted the creation of the euro while he was working at the European Commission in the 1990s.
His critique in his book The Rotten Heart of Europe – and especially his prediction that the euro would lead to a credit bubble followed by a sovereign default in the eurozone periphery – saw him fired from his job for a cause subsequently described in court as an offence ‘akin to blasphemy’ against the EU.
Later, in 2008, Mark Carney – then governor of the Bank of Canada, now governor of the Bank of England – cited Bernard alongside Nouriel Roubini and Ken Rogoff as one of the few economists who correctly foresaw the global financial crisis. His thesis in today’s article is as chilling for the UK as those two previous highly contrarian predictions
Merryn Somerset Webb.
George Soros has at times been a very successful speculator. But in his article in yesterday’s Guardian he asserted that Brexit would bring a sharp fall in sterling that would be very damaging to Britain. That suggests that he is confused about the underlying needs of the British economy – as is the Bank of England.
Soros says that unlike the obviously beneficial depreciation of sterling after “White” Wednesday in September 1992, when sterling left the ERM, a post-Brexit depreciation would cause a recession, because the Bank of England has virtually no room to cut interest rates and because Britain has a large current–account deficit.