One of the things you expect to happen in a recession is that money gets up and flees to safe haven currencies, typically the U.S. dollar. Despite all of the economic woes over here, the US greenback still looks to be a much safer place to stash cash than, say, the Zimbabwean dollar, Albania lek or, it appears, the Great British pound.
12 months ago, one pound would get you two dollars (to be exact, 1.98 on the 25th January, 2008.) Fast-forward 12 months and the pound has plunged by 30% so that today the exchange rate stands at 1.37 and falling. Clearly, the UK economy is viewed as services heavy - always bad news in tough times - and way too dependent on the health of the banking and finance sector, which isn't healthy at all. In fact, there's some evidence that UK banks are in even worse shape than their American counterparts, and that's quite an impressively horrid record.
Still and all, there are some upsides. For us, we have more expenses sitting in Europe than we do income, so things are easier than was the case in January last year. Travel and living expenses to visit le Continent are now much easier to swallow and of course there's a lot of downward pressure on the dollar-denominated air fares so jetting off for some arduous foreign travel hasn't been this attractive for years.
What with the 30% currency drop, combined with fast-falling house prices in the UK, anyone from overseas who fancies shopping for a flat in London or a country estate (in the country, presumably), now would be the time to do it. Alas, that takes cash, something else that seems to be a dwindling commodity around these parts these days!
But if you are to believe the graphic reproduced above (from here) the opportunity may be short lived. IF you believe it, of course! Nope, I've no idea, but will be watching with interest (though not from any cash I may have lying around ...)
1 comment:
I bet there are less Ipods being bought in the USA by brits on holiday/business trips :(
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