The pound plummeted to its lowest value in 31 years in a “flash crash” on Friday of last week—falling 6 percent in just two minutes.
Though there was some recovery, it was falling again as Socialist Worker went to press. Dominic Bunning, a senior strategist at money-laundering bank HSBC, predicted that it would continue slumping for more than a year.
It followed a similar fall in July after the vote to leave the European Union (EU).
It served as a reminder that the markets and the bankers who speculate on them aren’t subject to the votes of ordinary people.
A weaker currency can have contradictory effects. It makes imports more expensive, putting pressure on some firms’ costs. They will try to make us pay by putting up prices in the shops.
But some bosses, politicians and even union leaders have spent months blaming the steel industry’s crisis on cheap imports.
They cheered last week at EU plans to put tariffs on Chinese steel to make it more expensive.
Many businesses and pundits had previously complained that a strong pound made British exports too expensive to sell and held back growth.
Exports are now cheaper, so why aren’t they rushing to open new factories and offices? Instead there’s a real danger of an increase in the cost of living for ordinary people.
This will happen if bosses and the government succeed in keeping wages, pensions and benefits down.
Wage freezes during times of rising prices were among the biggest squeezes on workers’ incomes after the 2008 financial crash.
The Tories’ two biggest cuts to welfare were a switch to a lower measure of inflation, and a three year below-inflation freeze for most working age benefits.
So fighting for better pay deals and benefit increases must be a priority for unions.
The EU is a bosses’ club and the vote to leave it was a shock to the bosses’ system.
The markets reacted to it, and bosses will always try to pass their losses onto workers.
They also do this when left wing governments are elected, fighting back with investment strikes and speculative attacks on currency.
Workers can’t fight for their own interests without disturbing the bosses’ system.
The point isn’t to avoid threatening profits, but to stop them making us pay for their crisis.