Home—Blog—How the pound has fallen
Oct 19, 2012, 11:33
Posted byMerryn Somerset Webb
Comments (23)
I mentioned in my editor’s letter this week (here for subscribers: Why the pound is so weak) that one of the most overlooked factors affecting the performance of the UK economy in the last five years has been the collapse of our currency against pretty much every other serious currency in the world and the inflation that has caused.
I mentioned a few of the currencies that have soared against sterling - Singapore dollar is up 59%; the Brunei dollar 53%; the Canadian dollar 46%; the New Zealand dollar 43%; the Thai baht 42%; the euro 23%; and the US dollar 21%.
But I think that some of you might be interested to see the full extent of the sterling rout. The third column shows you how much the currency has risen, in percentage terms, against sterling since 17 January 2007.
Any currencies denoted in red (see the very bottom of the list) have fallen against the pound. There are very few of them and those that there are, are not ones it is really much of a triumph to have outperformed. Think the Syrian pound and the Argentinian peso.
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(19 October 2012, 01:10PM) Complain about this comment
So a holiday in the Seychelles would seem to be a good idea.
(19 October 2012, 01:27PM) Complain about this comment
It comes as no surprise to me; the UK as a whole has been/is living well beyond its means. Unfortunately, the consequences impinge upon those individuals who have been prudent.
(19 October 2012, 02:27PM) Complain about this comment
Yikes, looks like the Greek Dracma has outperformed the GBP. How is that possible?
(19 October 2012, 02:28PM) Complain about this comment
Watched the Keiser Report last night on RT. Predicting a Sterling Crisis at some point soon. Seems like its already started.
(20 October 2012, 10:45AM) Complain about this comment
Ok, you can't argue with those figures, but take it back another 5 years, and the whole picture changes. You seem to have taken the "best" possible year (2007) to judge it from. It wasnt so long ago that you could get €1.5 for your pound, and then even less time when it was around 1:1. I dont know how it compares with all the other currencies, but if you could produce that table over a 5 year, 10 year and 15 year time frame, I think we would see some huge differences. Taking 'a moment' in time to judge it from is at best misleading, and at worst........... well I'll leave that to you.
(20 October 2012, 11:28AM) Complain about this comment
I think £/€ rate in the few years leading up to 2007 was an aberration Chicogabb tbh.The debasement of sterling started way back - I remember when I was at school calling five bob a dollar, a slang coined (unintended pun) back in WWII when that was the rate of exchange, what chance of hitting a $4:£1 rate now? There's more chance of the inverse being true.
(20 October 2012, 11:59AM) Complain about this comment
Australian farmers might be reaping the benefits of UK monetary policy but it is at the expense of UK citizens, savers and taxpayers. UK Asset prices are being kept high only for UK residents!And still the UK government lecture it's citizens about saving for their pensions! In Sterling!!!
(21 October 2012, 12:59AM) Complain about this comment
#6 Romford DaveWell yes, over the previous decades the pound has devalued multiple times. What has the real reason for this been? I dont remember those times Im only 24, but my father always used to bang on about how many marks he used to get for his pound when he was in the british army stationed in germany pos WW2, around the end of 60's.So is it that Britain as devauled over and over and over again in order to remain at least soemwhat competitive in the international markets? Is that th eidea? ie we have such a terrible balance of payments that we just have to keep on devaluing in order to sell our products abroad?
(21 October 2012, 01:00AM) Complain about this comment
I am asking, as Im not sure. I understand that printing money cannot be good. My economic degree I think is a bit of a joke, it taught me a load of thery which is somewhat (though not totally of course) irrelevant given the last few years. But one thing we were always told: Increased money supply = increased inflation and with that, comes th eobviosu exchange rate movement. But we keep hearing that bonds in the UK are so low, not because we a re in good shape, just we are seen a sa better bet for the bond men to put their money, and they are happy to effectively lose money in real terms, to own UK gilts. That would imply a large demand for pounds wouldnt it? and the obvious shift in exchange rate that would imply.
All I know is I am drawn to this website as I am so totally confused with the entire system. I cannot see how any western country will get out of this mess, barring rampant inflation, and thus reducing debt to zero. But that would ruin any hard working, hard saving person, and how can that be ok? I heard the other day from someone on bloomberg or something, that the fact that the US and the UK have such large debts doesnt actually matter to them at all. They can debase their currency over and over again, and will never have to pay it back anyway, as the system will collapse before they do so. Its scary to think about.I guess Im like everyone else, i just wake up every morning and go and try and earn some money.... living in andalucia with a building company makes that somewhat of a contradiction in terms, but 7 billion people have to do SOMETHING everyday...
(21 October 2012, 12:44PM) Complain about this comment
@ 8., 9. &10. ChicogabbI also consider the decline of the GBP to be reflective of the gradual decline in the economic competitiveness of the UK within global markets. The decline has been masked by some extent by the selling off of 'family silver' (asset stripping) and by increasing overall debt.Now that the UK's credit card has been maxed out (so to speak) the manipulators are raiding the Middle Classes (particularly those of the Truly Private Sector) to postpone (in my opinion if not their's) possible eventual default. Expect to see the Middle Classes decimated over the coming decades.In the meantime, IMO, the Middle Classes are effectively standing as guarantor for UK gilts; in addition to a large proportion of the world's bankers' liabilities. The sacrificial lamb, in lieu of eradicating/drastically reducing Parasites.However, I don't agree inflation will satisfactorily solve the Mess, but it will expedite the rate of decline of the Middle Classes (at least).
(21 October 2012, 03:23PM) Complain about this comment
The 17th January 2007 is almost 6 years ago , not 5 and is deliberatley selected to distort the figures.2009, Euros to the pound 1.10. 2012, Euros to the pound 1.24. I make that a 12 % rise. As we do 57% of all our business with the Eurozone isn't that quite significant?
(23 October 2012, 10:17AM) Complain about this comment
Well, 79% of our business is internal, 10% EU, 11% rest of world.
(23 October 2012, 06:31PM) Complain about this comment
#13 .You are correct Mike, making it even more irrelevant.
(24 October 2012, 10:26AM) Complain about this comment
The Pound will have to be devalued by at least 90 percent from here - with debt to GDP well above 1000 percent. And even that may not be enough. Britain is staring at an economic abyss but will not face up to it until it arrives. The last time this happened was in the 1970s. Back then the Americans saved the British the blushes by arranging an IMF bail-out AND North Sea oil kicked in very soon to act as a massive saviour. Remember that in the 1970s, the IMF bailout was 2.5 BILLION Pounds. The same amount today would not cover British government expenses for more than two days.
(24 October 2012, 06:25PM) Complain about this comment
#15 Come off it JR. How much doom can you conjure up? Debts at 1,000% of GDP would amount to nearly £16 trillion. That could only be achieved by an accountancy sleight of hand to include very long term pension liabilities. Say about the next 25 years. In that time, even if GDP fails to grow we will earn over £40 trillion......4 times the purported "debt".
(24 October 2012, 10:21PM) Complain about this comment
@ Boris - "Come off it JR. How much doom can you conjure up?"Enough to cause incurable insomnia. :D I suggest that you should not challenge me. :)I enjoy debating you, Boris. But you won't make me change my mind. The figure above does not include unfunded pension liabilities. There are massive holes in your argument (and the cheery optimism underpinning it). But I won't get into a lengthy rebuttal. My figures are in the public domain and are capable of instant verification over the internet. I will let each reader be the judge independently. The figures are there. It is your choice if you choose to cheerfully ignore it.
(24 October 2012, 11:40PM) Complain about this comment
#17 JR .The floor is yours to explain how the UK owes over ten times its' annual GDP, whilst leaving out long term pension liabilities. On my maths I make it £1.4 trillion consumer debt, £1.1 trillion Government debt, £1.7 trillion corporate debt (albeit offset by £800 billion in cash hoarding) and £2.7 trillion of bank debt. That comes to 497% of GDP.Not quite 5 times.So over to you and your instant verification..........
(24 October 2012, 11:58PM) Complain about this comment
@ Boris - unfortunately, we have to do our own sums. If I am wrong and you are right, I will lose a lot of money and you will make a lot of money. The opposite happens if I am right and you are wrong. That is its own reward for being right. I don't think it is my duty to help you save money or your duty to help me save money. We have to look after our own selves. That is how it works. :)
(25 October 2012, 01:26PM) Complain about this comment
#19 JR. So you don't actually know. What a clumsy side stepping of the issue. You say you know where the other £5 trillion (not pensions) is, but won't tell us for selfish reasons of personal gain.
(25 October 2012, 08:21PM) Complain about this comment
@ 16. BorisThat £40trn you refer to as earnings is not likely to include a penny of profit to UKplc with which to offset the nation's debts as you appear to infer; it is to all intents and purposes multi-re-cycled Balance of Payments Deficit.Are all govt statisticians like you?
(25 October 2012, 09:29PM) Complain about this comment
#21 Rick. If that is so, then so are the so called debts and it really won't matter.
(26 October 2012, 09:59PM) Complain about this comment
Boris, you say:"If that is so, then so are the so called debts and it really won't matter."No, that is not so. The nation's debts are *accrued* Balance of Payments Deficit NOT *multi-re-cycled* Balance of Payments Deficit.Anyway, in your estimation, what "really won't matter"?
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