The knives were being sharpened. Jim Rogers was at it, with the legendary investor calling the UK a basket case. On one side of the great divide we were told sterling would crash if the government didn’t slash spending immediately. The other half said sterling would crash if the government slashed spending too soon.

Business investment fell off the edge of a cliff last year, and now house prices are down. Sterling fell sharply yesterday. Some have predicted parity with the dollar. The only reason why they weren’t predicting a crash against the euro is because euro land is just as badly stricken. And then the ONS revealed its second guesstimate of GDP in the final quarter of last year. The first guess said growth was just 0.1 per cent, and markets wobbled. If the second guess suggested growth was even worse, then all that would be left for any sane investor to do would be to take a leaf out of Blackadder’s book, and put a pencil up his nose, underpants on his face, and say ‘wibble’.

It seemed the UK would be scuppered should the data say growth was even one-tenth of a per cent less than it had said. What did it say?

Well, it came as a relief. The second estimate had growth at 0.3 per cent. We can all stop panicking. Well, maybe not, maybe we should panic just a little bit.

Jim Rogers is not known for his supportive words for the UK economy.

Last year he drew the wrath of our Peter Mandelson when he said the “UK was finished”. Back then, the pound was falling faster than an economic rock from that great investment bank in the sky, Lehman Brothers. And when Rogers, a former partner of George “boy” Soros made his pronouncement, John “Mr Spock” Redwood looked smug. Of course the pound will crash: “It would not be logical, Captain, if it didn’t,” said the former stalking horse. Some warned that parity with the euro beckoned. We were told to prepare for a crash in sterling.

And then the pound rose. In fact, it rose so high that some began to fear the UK was in danger of losing its newly found competitive advantage.

This time around, Rogers said: “Other currencies aren’t strong and the euro has real problems, with cracks much wider than Greece beginning to show, but it’s the pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the pound is potentially a basket case. That will put Britain in an extremely bad position.”

Some fear that a hung parliament will be curtains for the UK, for such a parliament won’t have the teeth to deal with the fiscal deficit.

Others fear there won’t be a hung parliament because, err, because a hung parliament won’t have the teeth to deal with the fiscal deficit, and the last thing we want is a government getting all angry and getting its teeth into the business of cutting government spending.

Yesterday, it was told here that George Magnus from UBS fears that if the government cuts spending too fast, then this will create a fall in sterling.

So that’s the three Georges. George “boy” Osborne, wants to see less government spending. George “boy” Soros’ former partner reckons the UK is a basket case. And George “boy” Magnus is worried spending will be cut too soon.

Meanwhile, and boy oh boy, this one is bad, business investment fell by 5.8 per cent in Q4 and by 21.4 per cent over 2009.

You see, the government poured its money into boosting spending, with clever little tricks such as cutting VAT. It did all it could to prop up housing. Interest rates were slashed, and mortgage lending improved.

And lo, house prices rose.

In this way the real bubble of the noughties, soaring house prices while investment was lacklustre, had a new burst of hot air blown into it. This is why this column hasn’t been quite so critical of bankers as most. It is not that we like bankers any more than we like the economic halitosis that is recession; we just don’t agree they were the main cause of the crisis. And by vilifying them, we failed to learn our lesson.

But the cheap pound is surely boosting the UK.

The real problem with the UK is not that it is a basket case, rather that too many of its eggs were put into one basket. Thanks in part to the City, money flowed into the UK, pushing up sterling, making life all but impossible for exporters. At last that has righted itself.

This column said some time ago that in order to ensure the pound doesn’t rise against the euro, we need to see some more bad news on the UK economy. We were being a tad facetious, but there was truth in the point too. It seems that Jim Rogers has done the UK a huge favour.

That growth turned out to be better than expected, could have been a disaster. Sterling could have risen. It does seem that ONS’ first estimates of GDP tend to be too high going into a recession, and too low coming out. Thanks to Mr Rogers, the danger of a rising pound has diminished.

© Investment & Business News 2013