Wednesday, Feb 25, 2009
Even the neighbours are worried about us
Bloomberg: EU Officials Concerned About Risks of Pound Drop
Bloomberg obtained a document, which was prepared ahead of the Feb. 14 Group of Seven meeting in Rome which stated - "the pound’s "very rapid” drop “raises questions about the financial stability of the British economy,”. The currency’s weakness “is a source of concern for the euro area.”
Posted by mountain goat @ 12:46 PM (952 views) Add Comment
6 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mountain goat said...
More bearish comment in BusinessWeek The Decline of the British Economy.
"It is a month that has seen Ed Balls, the Secretary of State for Children, Schools and Families, refer to the current recession as the "worst in 100 years," and which has witnessed the heads of the country's largest banks appear on television to apologize to the nation for the harm they have caused.
Meanwhile, Britons are asking themselves how things could have come to this. "
2. paul said...
So Mervyn King and Gordon Brown's policy of 'not targeting exchange rates' is coming home to roost by bringing into question the viability of the British economy.
Maybe Brown was right - "a weak currency is a sign of weak government".
3. plato said...
"Meanwhile, Britons are asking themselves how things could have come to this. "
Pretty simple answer : DISHONESTY
Saying that,it is not just a British phenominon and if EU officials are looking to blame the UK for their woes(as is a favourite pastime of theirs) they need to look at themselves, especially regarding massive loans to Eastern Euroland that stood not a cat in hell's chance of being repaid by what were basically non-economies.
4. Aaa said...
This is clearly VI attempt to get UK 's policy position on the pound changed though, isn't it? If it had said "EU officials were worried about the effect of the falling pound on Euro economies", I might believe it!
5. britishblue said...
The pound is now quite stable against the dollar and Euro. In any recession it better for a currency to be on the lower side, rather rather than the higher side. The long term average against the dollar is 1.55. (so less that 10% less than the average).
The Euro at its 1.7 levels a few years back was heavily undervalued and it meant that everytime we went abroad things were much cheaper. The pound was over valued. People who bought property in Spain were actually buying it when the pound was in an artificially high bubble. They were basing their pensions on a bubble pound and a undervalued Euro.
The Euro needed to be lower. History will tell us what the long term average for the Euro will be against other currencies. But it may only be 10% higher today than what the long term average is in the longer term. So being that it is better to have an undervalued currency rather than an overvalued currency, it could be argued that the Euro versus the pound at the moment isn't that bad for the UK.
At the beginning of January, the pound dropped against the Euro to 1.02 as speculators played with peoples lives and tried to get it to parity. That failed. Jim Rogers made his play at the time of the bank bail out. That failed. It is now at 1.125 - a 10% appreciation on the year.
The pound has also risen sharply against a range of Eastern European countries who arguably are going to be stronger trading partners longer term. For example, At the beginning of January in Poland there were 4.1 zloties to the Pound. There are now 5.3 zloties to the pound.
Taking the currency issue in ISOLATION, I think the UK's government policy has been spot on to say they wont support it.
This doesn't mean that I support the government, but in times like this there is a tendancy for grown people to blame the government for everything, rationale or not.
6. Jean said...
the pound is going to parity with the USD and the EUR, the economy is done