'Leave' Rejects Brexit Pound Plunge Warning

The Leave campaign has dismissed claims from the billionaire currency trader George Soros that exiting the EU could trigger a bigger plunge in the pound than on Black Wednesday in 1992.

Writing in The Guardian, Mr Soros says the British public are in danger of "grossly underestimating" the costs of Brexit.

He says: "Too many believe that a vote to leave the EU will have no effect on their personal financial position.

"This is wishful thinking. It (Other OTC: ITGL - news) 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."

But his concerns were dismissed by the Justice Secretary and Leave campaigner Michael Gove, who told Sky News: "George Soros was someone who thought that we should join the single currency.

"He backed the creation of the euro - thought that was a good idea, and actually as we've seen, the euro has been a job-destroying, unemployment-creating disaster."

Mr Gove added: "The fact that we have our pound, and the fact that our pound is strong, is a consequence of a decision that was made in defiance of predictions from people like George Soros."

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In his column, Mr Soros refers to Black Wednesday, when the UK left the European Exchange Rate Mechanism, arguing that a Brexit vote on Thursday could cause a "Black Friday".

Referring to his concerns about the pound, he says: "I would expect this devaluation to be bigger and more disruptive than the 15% devaluation that occurred in September 1992, when I was fortunate enough to make a substantial profit for my hedge fund investors, at the expense of the Bank of England and the British government."

He adds: "It is reasonable to assume, given the expectations implied by the market pricing at present, that 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."

That would make £1 worth about €1 – "a method of 'joining the euro' that nobody in Britain would want".

Developing his argument, Mr Soros observes that what happened in 1992 helped the economy: "That devaluation was healthy because the government was relieved of its obligation to 'defend' an overvalued pound with damagingly high interest rates."

But he predicts a different outcome, should it happen again, observing that interest rates are already very low, and unlikely to drop further.

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He also notes that the UK’s current account deficit is bigger now than it was in 1992, or during the financial crash of 2008.

And he doubts that a devaluation would increase manufacturing exports, as happened post-Black Wednesday, because uncertainty would reduce investment.

But the former mayor of London and Leave campaigner Boris Johnson told LBC radio: "The people I listen to are not people like George Soros, who speculate on market movements - that's how he makes his money.

"I listen to people like Anthony Bamford of JCB, the biggest private manufacturer in this country."

Lord Bamford, who is a Conservative peer and major Tory donor, has urged his employees to vote Leave on Thursday.

:: Time To Decide: A special programme on the eve of the EU referendum with Dermot Murnaghan on Wednesday from 10pm

:: In Or Out: Get all the results and reaction from the EU referendum from 9.30pm on Thursday