A vote to leave the European Union will trigger a plunge in the pound greater than Black Wednesday, billionaire currency trader George Soros has warned – but without the benefits seen after the crisis that made him a fortune.
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“The EU is costly, bureaucratic and blind to the impact it has had on people’s wages and soaring energy bills”, said Vote Leave chief executive Matthew Elliott, who accused Mr Soros of wanting to give more power to Brussels.
Writing in an opinion piece for the Guardian newspaper on Tuesday, Soros said the pound could fall by at least 15 per cent and possibly by more than 20 per cent. If Britain leaves the European Union it will 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”.
Third, Soros said, a post-Brexit devaluation probably won’t boost manufacturing exports like it did in 1992 “because trading conditions would be too uncertain for British businesses to undertake new investments, hire more workers or otherwise add to export capacity”. “This is wishful thinking”.
Sixty years of investing experience had taught him that the only winners would be financial speculators, the 85-year- old Hungarian-American business magnate, investor and philanthropist said.
“Brexit would make some people very rich, but most voters considerably poorer”, Soros wrote.
“It’s hard to speculate about one outcome instead of another”, Draghi said in a speech at the European Parliament, adding that the referendum was adding uncertainty to markets.
Last week, the pound fell sharply after polls suggested the Leave camp was gaining ground.
The pound held its biggest two-day advance against the dollar in more than seven years as investors bet that momentum in the countdown to Thursday’s referendum was swinging in favor of “Remain”.
Soros said that unlike after Black Wednesday, there was little scope for a cut in interest rates, the United Kingdom was running a much larger current account deficit, and exporters would be unable to exploit the benefits of a cheaper pound due to the uncertainty caused by a no vote.
A currency crash like that would be even more disruptive than Black Wednesday 1992.
The then Chancellor Norman Lamont, who in those days set the cost of borrowing, raised interest rates from 10% to 12% and then, later, to 15% in a desperate attempt to prop up the pound.
The possibility of the Brexit passing has been one of the biggest drivers here at home for US stocks this week, as investors wring their hands over the possibility of a major shift in our seventh-largest trading partner, as well as a potentially dramatic devaluation of the British pound if the Brexit vote passes. “They were the people who argued that we should join the single currency, the single currency as you know has brought economic misery”, Gove told BBC radio. He was wrong then and he is wrong now.
He also warned that a vote for leave would force the pound to towards parity with the euro – “a method of joining the euro that nobody in Britain would want”.
He added: “Sterling is now higher than where it was shortly after the referendum was called”.
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The websites of six major bookmakers showed the odds heavily pointing to a “Remain” vote, with the likelihood of Britain staying in put at around 80 percent.
