It will destroy the currency

Currency depreciation concerns often assume that government spending automatically reduces currency value. The relationship is more complex.

Exchange rates are affected by:

• Trade balances and current account positions
• Relative interest rates between countries
• Investor confidence and capital flows
• Productivity and competitiveness
• Political stability

A government that invests in productive capacity, infrastructure, skills, and innovation may strengthen its currency over time by improving economic fundamentals. A government that pursues austerity and underinvestment may weaken its position.

The UK’s currency has fluctuated significantly based on political events (Brexit referendum, leadership changes) rather than fiscal policy per se. The pound’s value reflects market assessments of the UK’s overall economic trajectory, not simple calculations about government spending levels.

For a country like the UK that imports significant goods, some exchange rate considerations are relevant to policy design. But this is an argument for strategic industrial policy and import substitution where feasible, not for arbitrary spending constraints.