Constancio joins the chorus of criticism of Britain’s ‘financial shock’: ‘It is unusual’ that ‘the pound is no longer an important currency’

The reaction of the foreign exchange and bond markets to the government’s fiscal plan of British Prime Minister Liz Truss and Finance Minister Kwasi Quarting was immediate, with the massive decline in the value of the pound and British sovereign bonds. The reactions of political and monetary officials outside the UK were not immediate, but they began to emerge in the face of chaos, with no difference between the former and the current one. Vitor Constancio, former Vice President of the European Central Bank (ECB) and former Governor of the Bank of Portugal, was one of them.

“It is unusual that “the pound is no longer a currency of international importance”And the He told the Financial Times,.

“Since Brexit, the UK has shown a lot arrogance He denied reality, as if a return to the greatness and days of empire (…) is illusory and reinforces the warning represented by Brexit, that moving away from the European center was bad for the United Kingdom”He said.

“Yes there is schadenfreudeConstancio told the British newspaper, using the German word to describe the comfort and learning that come from the suffering of others. “I wouldn’t say fun, that would be too powerful. But yes, the feeling of ‘I told you so’ is now prevalent in Europe.

The International Monetary Fund helped this idea on Tuesday with mainland capitals by issuing a statement saying it was “closely monitoring recent economic developments in the UK (…) in contact with the authorities”. With criticism of increased spending in times of inflation and tax cuts for the wealthy, with the increased likelihood of boosting inequality.

The Financial Times notes, in an article published on Thursday, September 29,, that many officials from continental Europe who have a portfolio of finances have already expressed themselves publicly about last week’s disaster in the UK. Like Bruno Le Maire, France’s finance minister, who said the old continent’s main concern is not Italy – which has just elected a far-right government – but London, which, under the European hat, “has an interest rate jumping above 4%,” he said.

In Germany, Finance Minister Christian Lindner is taking advantage of this argument to defend the maintenance of the debt brake, which will be restored in 2023 after being suspended due to the Covid-19 pandemic, the British newspaper reports. He described the Truss and Quarting financial shock as a “huge experiment” as “the country puts its foot on the accelerator while the central bank hits the brakes”.

In Spain, Deputy Prime Minister Nadia Calvino was quoted by the Financial Times as saying the tax cuts are a recipe for “disaster”, as they are being introduced in the UK and proposed locally by the opposition.