By Brian Swint Nov. 18 (Bloomberg) -- Former Chancellor of the Exchequer Norman Lamont said the pound's drop will help the British economy as long as it doesn't turn into a ``run'' on the currency. ``Plainly there's been a very significant depreciation, I'm not sure that qualifies as a run,'' Lamont, finance minister during Britain's last currency crisis in 1992, said in an interview yesterday. ``There are opportunities when a currency depreciates. But as so often when you have these situations, what starts as a small move can quickly become, quote, a run.'' The British currency's 24 percent decline against the dollar this year raises the specter of September 1992, when Lamont failed to prevent a sell-off in the pound that pushed it out of the European Exchange Rate Mechanism. JPMorgan Chase & Co. analysts predicted yesterday that the currency will extend its current slump to the lowest level since 1985. Investors have sold the pound on concern about the size of a U.K. recession and the prospect that Prime Minister Gordon Brown's government may ramp up spending, widening the biggest budget gap since World War II. ``If we are at risk of having a crisis, it's a funding crisis, funding our deficit,'' said Lamont, a member of the opposition Conservative Party, who was attending the Money Transfers London 2008 conference. ``I do not think they should have a massive stimulus package, I don't think we can afford it.'' Budget Deficit The U.K. Treasury had a budget gap of 37.6 billion pounds ($56 billion) in the first half of its fiscal year. Since March, Brown's Labour Party government has delivered tax cuts and spending increases worth 4.8 billion pounds to give relief to low- income earners, delay an increase in fuel duties and to help homeowners with mortgages and stamp-duty taxes. Chancellor of the Exchequer Alistair Darling will announce further measures in his pre-budget report on Nov. 24. ``If we are to have some massive, Keynesian stimulus, you could have figures that could dramatically shoot us up the league of indebted countries,'' Lamont said. ``There is a risk that long- term interest rates may shoot up.'' The pound traded at $1.5038 and 84.24 pence per euro as of 4:34 p.m. in London yesterday. The currency will drop to $1.28 and a record low of 92 pence per euro, JPMorgan forecast yesterday. Lamont defended George Osborne, spokesman for the opposition Conservative party on economics, who was criticized by Prime Minister Gordon Brown for saying that the government risks creating ``a proper sterling collapse, a run on the pound.'' Brown said Osborne needed to be more ``responsible'' in his comments. `Unfairly Criticized' ``Osborne has been unfairly criticized and he was only stating some things that had been said by many other people,'' Lamont said. He also said the pound's slide is no reason to reconsider adopting the euro, now shared by 15 European countries. ``I'm not in any way an enthusiast for joining the euro,'' Lamont said. ``After all, until the last few months, people would have pointed to the amazing stability of sterling. We haven't had any bad experiences because of being out of the euro.'' The Bank of England's benchmark interest rate fell below the European Central Bank's rate for the first time since the euro started in 1999 this month. The U.K. rate is now 3 percent, compared with 3.25 percent in the euro area. The U.K. economy will contract the most in almost three decades next year, the Confederation of British Industry, Britain's biggest business lobby, forecast yesterday. The euro area entered its first recession since 1999 in the third quarter. Lamont served under Prime Minister John Major as chancellor from 1990 and 1993, overseeing the country's last recession. He led the government's defense of the pound against speculators betting on its exit from the peg against other European currencies. Lamont announced an increase in the benchmark interest rate to 15 percent on ``Black Wednesday,'' Sept. 16, 1992, before the government abandoned the effort the same day and allowed the pound to drop out of the ERM. The currency lost 9.8 percent that week. To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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