'Strong government' needed to boost exchange rates

A strong government is needed to add force to sterling's exchange rate and the UK's economy, according to a leading economist.

Increased government spending has in the past related to favourable exchange rates, explained industry expert Ben Broadbent in the Times.

He added that the inverse is also true, as seen during the early 1980s and mid 1990s when government spending was low along with exchange rates.

However, these periods still saw a relatively strong rate of overall economic growth in the UK, which bodes well for the current period of recovery.

"A credible fiscal plan depends on having a strong executive government," said Mr Broadbent.

Mr Broadbent predicted that while the economic recovery from the current crisis will be slower than the recoveries at the end of last century, the comparable low rate of exchange suggests good news for long term improvement.

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Posted by Sarah Pitton