falling pound poses a serious danger for millions of ordinary British people since almost every daily essential, from food to fuel and manufactures,

A falling pound poses a serious danger for millions of ordinary British people since almost every daily essential, from food to fuel and manufactures, is imported. The dominance of finance capital has left the UK with a manufacturing sector that accounts for no more than 16 percent of GDP, while the service sector, much of it related to finance, accounts for 73 percent.Joining the euro does not offer a lifeline, since it would not offer a solution to the economic and fiscal problems that underlie the falling pound. With government borrowing now set to rise to 57 percent of GDP, it might not even be possible.Britain’s borrowing requirement puts it well outside the convergence criteria originally set for euro membership. The criteria might be relaxed because so many existing member countries are now outside those criteria, too. They have also had to borrow vast amounts in response to the credit crunch. Ultimately, the decision is a political one, and as national tensions increase in Europe, the other members may be unwilling to admit Britain.
Even as a member of the euro, Britain would still have to raise money by selling bonds on the international markets to finance its fiscal policies. The cost of doing so depends on the perceived risk that a government will default on the bonds it issues.The markets use credit default swaps (CDS’s) to insure against government bond defaults. The price of CDS’s has risen for all the major economies. Simply being in the euro does not protect a government against the risk of default. Italy, a euro member, has the highest CDS price because its debt-to-GDP ratio is now the highest in the Eurozone, at 103 percent.But the price for British CDS’s has risen the fastest. The price of insuring £10m of UK debt against default over five years has risen from £8,000 last February to £60,000 in the middle of November, and has now reached £110,000 (US$162,000)
According to the Financial Times, “It now costs more to ensure the UK against default than some of its banks such as HSBC and Lloyds.”
“No one expects the UK to actually default,” said Roger Brown, global head of rates research at UBS, “but the risk is higher because of the amount of debt.”No one may expect a country like the UK to default, but until recently no one expected a major bank to go under either, still less a whole string of banks. Amid so many unknowns, one thing is certain. The experts may disagree on the correct response, but they are all agreed on who should bear the cost of the recession that is engulfing the world economy—the working class.

Posted in: ” said Roger Brown,“but the risk is higher because of the amount of debt.”,global head of rates research at UBS,No one expects the UK to actually default