The real lesson in sterling’s slide

But in the unlikely event that David Cameron is genuinely concerned that we might end up in the hands of the IMF — rather than scaremongering to secure party political advantage — logically he should lead his party to re-consider its attitude to British membership of the euro as a way of preventing such an outcome.

At some point the British people will realise, even if their politicians don't, that the UK economy and an independent currency will always suffer more in times of global turbulence because our economy on its own is not big enough to support an international financial sector as large as ours . And these global tugs of war will get worse as China's currency comes to challenge the dollar, the euro and Japanese yen. The voters ought to be given the opportunity to judge whether that is a price they want to continue to pay.

Meanwhile, the point about sterling's fall is that of course it matters, but not as a harbinger of national insolvency. Rather, it is the scale of the pound's decline and the fundamental changes this will unleash, given that it has fallen by about a third since it began its slide, which puts it on a par with the major devaluation of the 1930s when we came off the Gold Standard and 1947 when we began to re-adjust to the economic reality of the post-war world.

The point of these big devaluations was that they were so big that they ushered in huge changes in the economic power balance of the nation and therefore in society at large. They were big enough to alter the distribution of wealth in the country and the process of wealth creation. If history repeats or rhymes, the devaluation currently under way could once again be the agent of fundamental change in our society. It would be far better, surely, that this, rather than scaremongering, should be the subject of political discussion.

Andrew Smithers, the economic consultant, paved the way a few weeks ago when he published a paper that analysed how Britain would grow in the absence of hyper-charged financial services. He concluded that for the next decade or so there would most likely be a much reduced growth rate — down from 2.75% to 1.75%.

Unfortunately, this amount of growth is not enough too support our current level of public services, even with Scandinavian levels of personal taxation. So, for starters, imagine a world where the vast City bonuses are no more and social security and state benefit payments are also much reduced. Society will have to adjust — not least by saving more and consuming less.

Lower growth rate is the consequence of having to build more internationally competitive manufacturers and service providers to fill the gap in our international trade previously, though briefly, met by financial services. It is by no means an impossible task — but it will inevitably take time, and application, and mean a bit less froth for us all as the entire economy slowly re-positions itself.

That is the real lesson of the new level for sterling — not hand-wringing about whether foreign investors will continue to lend us money.