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Devaluing the Pound Isn’t a Solution, It’s Default

July 5 (Bloomberg) -- Greece’s inability to devalue its currency is often cited as a reason for the extreme economic pain its citizens are enduring, and many commentators say the country should return to the drachma to restore competitiveness.

In the U.K., which -- unlike Greece -- isn’t part of the euro area and can devalue if it wishes, there’s growing pressure to do so. A letter recently circulated to some 3,000 influential figures proposed deliberately weakening the British pound to boost exports and hence economic growth. Debasing currencies in this way is promoted as an alternative to sovereign default, as well as to other methods of increasing competitiveness, such as cutting nominal wages.