“If you’re looking for a currency that’s got a stable effective exchange rate you couldn’t do better than look at sterling,” said Mervyn King, governor of the Bank of England, on November 14. He was tempting fate. Since then, the effective exchange rate has fallen by 6 per cent, and sterling’s decade of stability has come to an abrupt halt. The UK is a small, open economy. Monetary and fiscal policymakers will have to be mindful that the pound is, once again, in play – and it may fall a lot further.

On fundamental measures such as purchasing power parity – no matter how unreliable they are as short-term exchange rate forecasts – sterling remains overvalued against the dollar and a host of other currencies. Statistical revisions that show the UK’s current account deficit is 5.7 per cent of output, and that net investment income is negative, were a revelation. The pound’s previous level was not sustainable.