In the middle of this week, the UK pound fell to the lowest in 168 years (or possibly more the data's a bit dodgy before that) as measured against a basket of the currencies of its major trading partners (Germany, France, the US, Japan and Italy). It is weaker than it was when we left the Gold Standard in the 1930s, weaker than it was when we left the European Exchange Rate Mechanism in 1992 and, of course, weaker than at the bottom of the financial crisis of 2008.
This can't be dismissed lightly: it's a big deal. But the question is a big deal in which direction? Is it a nightmare for Britain, or a scary bout of volatility with a very silver lining. In our cover story, John Stepek has the answer. Sterling has been overvalued for years (we have been writing about this very thing in MoneyWeek since at least 2008) and it is generally accepted that our economy is horribly unbalanced: too much finance, too little of everything else. If we really want a more balanced economy the sterling crash could be "exactly the medicine we need". It could bring us lower house prices, higher interest rates, better productivity, a genuine manufacturing resurgence, a reduced dependence on finance and perhaps even less of a north-south divide. Who could be against any of those things? They are, of course, the very things that almost all commentators on all sides have been claiming they want the state to deliver for years.
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