The Brexit crash will make all of you poorer – says billionaire who has profited hugely

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George Soros wrote this on Monday, before the EU referendum vote.

He’s known as the ‘billionaire who broke the Bank of England’ after his hedge fund profited hugely on the 1992 crash.

It is believed he has done so again after Thursday’s vote – but at least he tried to warn you what would happen! Read:

Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking. It would have at least one very clear and immediate effect that will touch every household: the value of the pound would decline precipitously. It would also have an immediate and dramatic impact on financial markets, investment, prices and jobs.

The Bank of England, the Institute for Fiscal Studies and the IMF have assessed the long-term economic consequences of Brexit. They suggest an income loss of £3,000 to £5,000 annually per household – once the British economy settles down to its new steady-state five years or so after Brexit. But there are some more immediate financial consequences that have hardly been mentioned in the referendum debate.

Sterling is almost certain to fall steeply and quickly if there is a vote to leave… After a Brexit vote the pound would fall by at least 15% and possibly more than 20%, from its present level of $1.46 to below $1.15 (which would be between 25% and 30% below its pre-referendum trading range of $1.50 to $1.60). If sterling fell to this level, then ironically one pound would be worth about one euro – a method of “joining the euro” that nobody in Britain would want.

The Bank of England would not cut interest rates after a Brexit devaluation (as it did in 1992 and also after the large devaluation of 2008) because interest rates are already at the lowest level compatible with the stability of British banks… There will be very little that monetary policy can do to stimulate the economy and counteract the… loss of demand.

Second, the UK now has a very large current account deficit – much larger, relatively, than in 1992 or 2008. In fact Britain is more dependent than at any time in history on inflows of foreign capital… After Brexit, the capital flows would almost certainly move the other way, especially during the two-year period of uncertainty while Britain negotiates its terms of divorce with a region that has always been – and presumably will remain – its biggest trading and investment partner.

Third, a post-Brexit devaluation is unlikely to produce the improvement in manufacturing exports seen after 1992, because trading conditions would be too uncertain for British businesses to undertake new investments, hire more workers or otherwise add to export capacity.

Source: The Brexit crash will make all of you poorer – be warned | George Soros | Opinion | The Guardian


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4 thoughts on “The Brexit crash will make all of you poorer – says billionaire who has profited hugely

  1. Nick

    he is so right with his forecast

    the UK does make quality goods that is a fact but only in very selective markets and certainly not at any level to keep this country viable

    most uk goods imports are from china first followed by the EU / turkey etc

    i think it’s about 80 china/20 in percentage terms ?

  2. mohandeer

    Thanks for this article, it’s a pity the masses didn’t all have a copy of it in their “remain” pamphlets. For some, like the hefty BNP element, it would have made no difference, such is their hatred of “foreigners”, but it might have gotten through to non racist bigots.
    There’s a special place in hell for George Soros, I wish him there ASAP, but at least he did something useful be it too late to change the vote. If, however, Article 50 is not instituted in a timely fashion, there might yet be a call for a second referendum. Farage said if the vote went to remain by a small margin, then a second referendum should be given. So, we should have a second referendum according to Mr. Farage’s logic, because the vote was only 2% below/above the mean, well that’s my thinking, anyway.

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