anitram said:
That's pretty much always been the case and has nothing to do with Blair. The Brits keep their pound artificially high. The fact the disparity is now greater is a reflection on the US dollar going down, not on Blair enacting some marvelous economic reforms.
It's not held high artificially that much, but rather had to do with the philosophy of keeping unemployment low.
From 1945 until Margaret Thatcher entered into government, every government was crazy about keeping a low unemployment. So they didn't care about high inflation that much, which was mainly what pushed the pound up that high.
When Thatcher came into office she introduced a whole new philosophy, saying that a high inflation is a lot worse than low unemployment. Because you can't have both, unemployment increased, but inflation has been stabilised since then.
With Blair privatising the Bank of England he did something really unique. Now the Bank of England can act independently from what politicians would like them to do in order to get re-elected (well, as independently as one they can be) and together with the European system of Central Banks it's their philosophy to keep inflation just under two per cent, which means currency stability.
You can control inflation a whole lot easier than unemplyoment, because you have very powerful means to achieve the inflation target you set for your country. For example, by changing the base rate for interests.
I'm curious, Blair never excepted that the UK might introduce the Euro some time in future. The Conservatives, however, were more strict and with them in power it's rather unlikely that Britain would join the Euro Zone in near future.
But I don't know the position of Brown on that. And how long will Brown probably govern before the next general elections?
