Why is the pound in a state of collapse ?

[rspltd]

It depends which 'expert' you quote and don't forgot it is more often or not these 'experts' that got us into the financails mess in the first place. If they were so clever they would have been playing the futures market and would now being sitting on their yacht somewhere warm rashter than working for a living. Here's an alternative point of view.

"The economic horizon has now significantly darkened as the European Union economy is hit by the financial crisis that deepened during the autumn and is taking a toll on business and consumers," EU Economic Affairs Commissioner Joaquin Almunia said in a statement. "In 2009, the EU economy is expected to grind to a standstill."

The EC predicted economic growth in the 27-nation EU will be a paltry 0.1% in 2009. However, many analysts - including those with BNP Paribas SA (OTC: BNPQY), Citigroup Inc. (C) and Royal Bank of Scotland PLC (RBS) - believe even that figure is generous.

"A recession in 2009 seems now unavoidable," Jacques Cailloux, chief Eurozone economist at Royal Bank of Scotland, told Bloomberg News. "Today’s new GDP forecast of 0.1% for 2009 by the European Commission still looks too optimistic to us."

[John50]

Drewth, I've been watching with increasing alarm as well. Its been a day or two since I looked but I had a shock this morning when I saw an 84 pence Euro. When I first came here is was 66 pence.

Toby Fischer, an FX analyst, has a good write up and interesting site as well:

Euro Pounds Currency News: Sterling stays in low range against the Euro

This guy reckons that the UK is in a far worse state than the Euro Zone.

I note that both 'Sandwich Stops' on Orihuela Costa have cut their opening hours and reduced staff and the word is that two big name Italian Restaurants are going - don't know which ones yet though. I believe the fall in Sterling as a result of the economic crisis will continue to adversely affect Sterling dependent ex-pat businesses in a big way - except the silly money being frittered on TV provision, of course !

[Drewth]

BBC asks: is it time to ditch the Pound and join the Euro ?

Interesting BBC news programme on 'The World Tonight' 17 November, 2008 covering the above question.

Included in this broadcast with the part in question commencing at the 12 minute 50 second mark:

BBC iPlayer - The World Tonight: 17/11/2008

[Lewrog]

Spooks tonight, now I see whats going on!

[Drewth]

Indeed, it did show a very minor improvement at close this evening:
£1 = 1.185 Euro
E1 = 84.4 pence

but, oh for those halcyon days of just two years ago eh ?

[Armin Tamzarian]

Prime Minister Brown comments on the virtual collapse of sterling:

UK's Brown blasts opposition for comments on sterling

2008-11-17 16:35 UTC (GMT)

LONDON, Nov 17 (Reuters) - British Prime Minister Gordon Brown blasted the opposition Conservatives on Monday for suggesting that Brown's plans to let borrowing rise could cause a run on the pound.

'I have never ... given a running commentary on the currency, as the opposition seem to want to do. I think it is highly irresponsible for them to do this in the present circumstances,' he told parliament.

'A year ago the dollar was at a low level, this year the pound is at a low level. Currencies change. If they wish to give a running commentary on sterling, they are not responsible to hold the position of even oppposition,' he added.

I loathe all politicians no matter which party they claim to support, but the current set in power have to be the worst of all time.

The quote above is so disingenuous it defies belief.

The opposition's shadow chancellor has no power and his pronouncements mean nothing. In fact that was proven today when the Pound STRENGTHENED against both the Dollar and Euro in the wake of his comments!

On the other hand, the people actually IN POWER, have been making idiotic speeches over the past couple of months practically willing the disintegation of the Pound.

First of all the Chancellor made his statement that British economic conditions "are arguably the worst they've been in 60 years", and then the Governor the Bank of England came out with his warning that Britain is entering a recession and that sterling was likely to be one of its biggest casualties.

Now those two comments really DID cause the current collapse.

[Drewth]

Bloody hell Drewth, think of all the lovely things you have that money cannot buy, family being the main one, when you count up all those things you realise how lucky you really are.

I do appreciate that. Sadly, I have none and am alone now.

The exchange rates situation fascinates me and many others having been subject of much discussion on other forums and it is having a telling affect on matters, regrettably. I cannot figure out why the pound is so weak with a poor prognosis when at least two major Euro based economies have declared themselves to be in recession. What is it that makes the Euro so strong v. Sterling ? Surely not the quarter per cent difference in central bank rates ?

[Chrisdee]

Bloody hell Drewth, think of all the lovely things you have that money cannot buy, family being the main one, when you count up all those things you realise how lucky you really are.

Prime Minister Brown comments on the virtual collapse of sterling:

UK's Brown blasts opposition for comments on sterling

2008-11-17 16:35 UTC (GMT)

LONDON, Nov 17 (Reuters) - British Prime Minister Gordon Brown blasted the opposition Conservatives on Monday for suggesting that Brown's plans to let borrowing rise could cause a run on the pound.

'I have never ... given a running commentary on the currency, as the opposition seem to want to do. I think it is highly irresponsible for them to do this in the present circumstances,' he told parliament.

'A year ago the dollar was at a low level, this year the pound is at a low level. Currencies change. If they wish to give a running commentary on sterling, they are not responsible to hold the position of even oppposition,' he added.

[Drewth]

Prime Minister Brown comments on the virtual collapse of sterling:

UK's Brown blasts opposition for comments on sterling

2008-11-17 16:35 UTC (GMT)

LONDON, Nov 17 (Reuters) - British Prime Minister Gordon Brown blasted the opposition Conservatives on Monday for suggesting that Brown's plans to let borrowing rise could cause a run on the pound.

'I have never ... given a running commentary on the currency, as the opposition seem to want to do. I think it is highly irresponsible for them to do this in the present circumstances,' he told parliament.

'A year ago the dollar was at a low level, this year the pound is at a low level. Currencies change. If they wish to give a running commentary on sterling, they are not responsible to hold the position of even oppposition,' he added.

[Drewth]

BBC news article/Tory Shadow Chancellor forecasts possible full collapse in the value of the pound:

BBC NEWS | Video and Audio | PM 'regrets' Tory economy attack

[Drewth]

Good informative article in today's Independent about the fall of the pound:

Pound sinks to record low against the euro - Business News, Business - The Independent

[Drewth]

Terribly sad to see on other forums people handing keys in for their homes and businesses closing. The pound very sadly drops further and I don't suppose any of us could have anticipated this. My friends' restaurant of six years closes after Christmas and by heavens, he worked hard to make it a success and it was until this last year when takings are down by over 50%. Went there tonight with my friends, a lovely couple on basic state pensions and they are very worried indeed about the loss of their income in such a dramatic way. A very quiet and rather sad evening indeed.

[koali]

Well, have had the law laid down tonight. Pound down to E1.16 or 86.1 p so the internet goes tomorrow until matters improve. Adios - its been fun.

[John50]

Its being talked about on many other forums as well. I wonder how many TV contracts will be cancelled ?

An article that is very relevant:

Jeremy Warner: Sterling crisis threatens Brown's reflationary plans - Jeremy Warner, Business Comment - The Independent

Considering the UK has to buy in most of its materials including food, I wonder if the UK Government with the prospect of an exchange rate crisis on its hands may have to step in as they have done before ?

Prices will go up at home and that is not good for politicians not their electors.

[Drewth]

Now Germany have admitted they are going down is that going to make a difference to the pound?

I saw this and hoped so. Guess what ? the Pound dropped again ! Spot trading now as under:

£1 = 1.181 euros
Euro = 84.7 pence

This is really most concerning and beyond my understanding. If the Eurozones largest economy, Germany, says it is in recession the Euro gets stronger. Let us all hope for a cut in euro zone interest rates.....soon.