Cameron Could Help to Lift Sterling Again

thenews 2013.01.17 16:00

David Cameron‘s speech on the U.K.’s future in the European Union could be big news for sterling.

In fact, it could prove to be a defining moment that justifies the pound’s safe-haven status and makes it an even more attractive alternative to the euro.

At the moment, the fortunes of the pound look distinctly poor.

The sterling index has been falling steadily since the start of the year and, as Capital Economics chief U.K. economist Vicky Redwood suggested in recent research, there are seven good reasons to keep selling the currency.

Slow economic growth, more quantitative easing, a deteriorating current-account position, easing of the euro-zone debt crisis, the possible loss of the U.K.’s triple-A rating and a loss of fiscal discipline all feature on the list.

And then there’s the big issue of Europe.

thenews 2013.01.18 10:14 #1

Cameron Speech Excerpts Raise Specter of EU Exit

British Prime Minister David Cameron prepared a speech that put 40 years of integration with the continent on the line by raising the specter of a U.K. exit from the European Union.

While Cameron postponed the speech in Amsterdam due to the hostage crisis in Algeria, his office earlier released excerpts for publication before the scheduled address today.

“More of the same” won’t be enough to guarantee the EU’s future due to Britons’ dismay at a lack of consent in their relationship with the 27-nation bloc, Cameron planned to say, according to the text.

“There is a gap between the EU and its citizens which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is, yes, felt particularly acutely in Britain,” he was due to say. “The danger is that Europe will fail and the British people will drift towards the exit.”

Cameron is responding to pressure from lawmakers in his Conservative Party for looser ties with the EU or an outright departure from the political union. While giving voice to his base’s discontent and holding out the prospect of a popular vote on renegotiated membership terms, Cameron has already received pushback from European counterparts.