While the pound is reportedly going parity with euro on London's high streets, the British government refuses to take any intervention action.

The Treasury said that protecting the currency is "not a first-order issue" as euro is going parity with pound and even readies to overtake sterling in markets for the first time.

Ministers said that they will simply hope Britain's beleaguered currency stabilizes as broader measures to stimulate the economy begin to take effect, according to the Independent on Monday.

Sterling has fallen to a series of record lows against the euro in recent days, and looks set to reach parity with the single European currency for the first time,

The Europe Minister, Caroline Flint, confirmed the value of the pound was not a "first-order issue" and Yvette Cooper, chief secretary to the Treasury, said bolstering the currency had never been the Government's aim.

Senior government figures are wary of mistakes made in the lead-up to Black Wednesday in 1992, when attempts by John Major's government to prop up the pound failed and led to a bill thought to be more than 3 billion pounds

The growing possibility of deflation, now discussed as a possibility by the Treasury, is seen as a greater threat to the economy as official figures published this week are expected to show that inflation dramatically slumped last month to under 4 per cent, compared with 4.5 percent in October.

So ministers must cross their fingers as the government's 20 billion pounds (about 30 billion US dollars) fiscal stimulus package, which includes a temporary 2 percent cut in the rate of VAT, kicks in.

"We have never had a policy of targeting the pound. Our policy has been to target inflation," Cooper said Sunday, saying that the fall in the pound had been caused by "uncertainty in the world economy" and that the government was "plotting a course" to help Britain emerge from the economic crisis intact.

She said international cooperation, together with reviving bank lending, were the best methods of breathing life into the economy, which would in turn restore faith in the pound.

Cooper said she was optimistic that the pound would begin to stabilize again "if we get those other factors right".

Critics of the Government said, however, the apparent flight from the pound had been caused by the Government's unaffordable spending package, coupled with rising national debt.

A 2.5 percentage point cut in interest rates in just two months by the Bank of England has also sent Britain's bank rate below that in the eurozone.

Others inside the party hinted that Labor would have to rethink its apparent abandonment of the pound once its effects began to be felt more generally.

John Varley, group chief executive of Barclays, also predicted the economic gloom would worsen. Britain was only halfway through the slump and house prices would fall a further 10 to 15 percent before the end of next year, he said, adding that unemployment could hit 7.5 percent within the next 12 months.

(Xinhua News Agency December 15, 2008)