SocGen strategist says large drop in pound like in 1992 could be beneficial

A strategist from Societe Generale has said that a fall in the value of the pound may not necessarily cause a recession, but even help to stimulate a flailing UK economy.

Britons have been heading to polling stations today to cast their votes on whether Britain should maintain its membership in the EU, or leave to follow its own devices.

Britons have been heading to polling stations today to cast their votes

Doom and gloom has been predicted by the majority of economic figures, including those from the IMF, the OECD, the Bank of England and the UK Treasury. But Albert Edwards from SocGen disagrees.

"There is an argument that a Brexit might look similar to the aftermath of sterling’s ignominious exit from the ERM on ‘Black Wednesday’ 16 September 1992," said Edwards.

"After this much-feared event, the UK economy actually recovered strongly and unemployment fell sharply. In a current environment where central banks and governments have failed to generate a strong enough economic recovery to normalise interest rates amid persistent deflationary pressures, one would have thought a substantial decline in one’s currency would be welcomed."

"After this much-feared event, the UK economy actually recovered strongly and unemployment fell sharply" Albert Edwards

Edwards disagrees with those who have put the blame for the UK's current economic situation down to political uncertainty with the referendum looming.

"The UK economy is a mess and that has nothing to do with Brexit – it has everything to do with economic mismanagement. We studiously take no view on the outcome of the vote; we simply discuss the possible implications of a sharp decline in sterling in the event of Brexit."

"But there is an argument that global investors have overly focused on Brexit at the expense of other more important macro events."