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Originally Posted by Hugh
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A 20 per cent drop in the value of the pound might not be “such a bad thing”, David Davis has claimed as he called for a tax-cutting no-deal budget.
The former Brexit secretary urged Philip Hammond, the chancellor, to draw up tax and spending changes to create a “pro-business, pro-trade, pro-environment” Brexit in the spring.
Writing for The Times Red Box politics site, Mr Davis brushed aside “another doom-laden growth forecast” from Mark Carney, the Bank of England governor, which downgraded predictions for this year from 1.7 per cent to 1.2 per cent.
“If we must leave without a deal then so be it and we can cut our tariffs to zero to help manage short-term disruption,” Mr Davis said.
He argued that a sharp fall in the value of the pound could be a good thing. “Analysts predict that in the event of no deal, sterling could fall by over 20 per cent,” he said.
“Is this such a bad thing? Our goods will become 20 per cent more competitive on the global market and our EU competitors’ goods would be less competitive.” However, it would cost Britons holidaying in Europe much more, while companies importing from Europe would face increased costs.
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Yes, David, our exports will become 20% more competitive. However, the UK is not a primary manufacturer, we need to import parts and raw materials to make finished goods and they will be 20% more expensive. Let's also ignore the tariff and non-tariff trade barriers too...