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

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

In the U.K., which -- unlike Greece -- isn’t part of theeuro area and can devalue if it wishes, there’s growing pressureto do so. A letter recently circulated to some 3,000 influentialfigures proposed deliberately weakening the British pound toboost exports and hence economic growth. Debasing currencies inthis way is promoted as an alternative to sovereign default, aswell as to other methods of increasing competitiveness, such ascutting nominal wages.