Two former Conservative chancellors have issued grave warnings about the British economy as the government braced itself for the pound to slide following the loss of the UK's coveted AAA credit rating.
Sterling is expected to fall against other major currencies as the financial markets respond to Moody's decision on Friday evening to cut the national credit rating, repeatedly used by the chancellor, George Osborne, to validate his tough economic measures, by one notch to AA1.
While clearly supportive of the coalition's austerity programme of deep public spending cuts, the two senior Tories, Kenneth Clarke and Lord Lawson, both cautioned that the UK was vulnerable.
Clarke, now minister without portfolio in the cabinet, defended Osborne's previous claims that the government's economic policy could be judged on its credit rating, arguing that problems with the global economy and particularly in the eurozone had pushed recovery "several years" beyond what had been expected at the general election in 2010.
"It seemed perfectly sensible to me at the time," Clarke told the Sky News Murnaghan programme. "It would now if it were not for the fact that it is quite clear that the global economic and financial crisis is persisting, it's worse than we thought, several more years are required."
Speaking on the same programme, Lawson said it was vital that ministers and the Bank of England made no suggestions they would like to see a further weakening of the value of the pound – which could help boost exports by making British goods cheaper for foreign customers – in case it prompted "a run on sterling".
"That would not be clever, that would not be sensible, that would not be helpful," said Lawson. "But I don't think that George Osborne wants that."
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