Watch Raheem Sterling explain that he was a bit of a cry baby in youth football.
www.youtube.com/embed/j4yag4IIkXw315
Of course, just 10 months ago the England winger and his agent were battling with former club Liverpool to engineer a move to Manchester City. In one of the least edifying transfer disputes of recent memory, money talked and, at £49m, Sterling became the most expensive England football player ever.
Was the pound overvalued all along?
Here’s where the parallel with the pound becomes a bit more serious. We perhaps expect more of Raheem Sterling and his highly paid team-mates because of the inflated valuations placed on them. The fundamentals of natural talent, composure and tactical awareness are not necessarily reflected in the price paid for our footballers – a fact shown up by their glaring inadequacies judged against truly world-class performers, or even Icelandic fisherman.
Can the same be said of the UK’s currency? After all, fundamentally the value of the pound reflects the demand for sterling from other parts of the world to pay for British goods and services. Britain has a yawning current account deficit of 7 per cent, which might suggest the currency was overvalued anyway.
Like the Premier League, however, the pre-Brexit UK was a haven for overseas investors. The attractiveness of UK property and infrastructure underpinned some of the demand for sterling to purchase these assets (and their sale in part funded the UK’s current account deficit).
Since Friday’s monumental referendum result, many investors have had their confidence in the growth prospects of the UK economy shaken and the pound has plummeted in value, most notably against the US dollar. Thanks to the floating exchange rate policy now adopted (unlike in the ERM crisis, when sterling was pegged to the Deutschemark), the pound can find its new equilibrium but there is a danger that inflation in the price of imported goods will hit households.
The value of currencies are to an large extent, the reflection of sentiment towards economies. In the long run it must be hoped that the confidence of the UK economy is more robust than that of the England football team in the second half against Iceland.
