Although not entirely attributable to the cut in the pound's value, inflation nearly tripled between 1967 and 1970. And while devaluation did provide a short-term boost to the British economy, growth remained below the levels of the country's international competitors.

What happens when you devalue the pound?

A devaluation in the exchange rate lowers the value of the domestic currency in relation to all other countries, most significantly with its major trading partners. It can assist the domestic economy by making exports less expensive, enabling exporters to more easily compete in the foreign markets.

Why is devaluing the pound bad?

Devaluation is likely to cause inflation because: Imports will be more expensive (any imported good or raw material will increase in price) Aggregate Demand (AD) increases – causing demand-pull inflation. ... The concern is in the long-term devaluation may lead to lower productivity because of the decline in incentives.