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We’re visiting Spain shortly staying with friends, but somewhat reluctant because of the dire, pathetic exchange rate for Brits now. We will probably not spend anything like as much as on previous visits, it’s a matter of finances not a wish to spend less, Spain will not make great gains from people like us at a tourist rate of approx. 1.09 euros per £ stg.
Just how much is Spain’s economy suffering from tourism loss and reluctance to spend by Brits in general?
At about parity, Eurozone countries who need a financial boost are missing out big time IMO. Are the ECB aggravating this problem?
Obviously this must also be impacting on the economies of France, Italy, Portugal, Greece etc irrespective of the slump in their property markets.
🙄On a similar matter, the UK Gov’t is not helping the UK economy by many of it’s cut-backs, and it’s intransigence in not helping the largest group in Society, Savers, who outnumber borrowers 6-1. Their measures have not helped so far, but they don’t seem to have Plan B 😡
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Your point is, Angie ???.
ECB is there to protect Germany & not the rest of the EU economies. The Countires benefiting from all this is Turkey, Morocco, Croatia etc. As they say one man’s loss is another man’s gain.
The savers are usually the older brigade. The government has used & abused them whilst they were young & now as they are older &/or retired they are of no use to them and as such are ignored. This is not the policy of the current Government it has been the case for the last 30 + years.
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Shakeel, I totally agree with you that Savers are ignored by Gov’ts who on the one hand say ‘you must save for your retirement’ and then totally ignore them just when their savings are being eroded by inflation and, low interest rates yet this large group who outnumber borrowers 6-1 could help economies out of the doldrums. ie: if the UK’s 20 million+ savers spent an extra £20 per week it would put an extra 20 Billion Pounds into the economy, plus another 4 Billion in tax take like VAT yet the likes of Mervyn King and the Treasury fail to address this point.
Meanwhile their policy of low interest rates over the last 27 months has just not worked, it’s not stimulated the economy as they said and people are just not spending.
My main point though was, what is the impact of Brits like us who are reluctant to visit Spain, or, if they do visit, only intend to spend much less than they would have done, and all down to the dire exchange rate? This applies to a lot of other eurozone countries’ economies.
At near parity, buying a coffee or meal in Eurozone countries equates to 25-30% more for Brits now. 😉
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I forgot to mention shakeel that Central Banks like the BOE, (and probably the ECB) are being led, advised, cajoled, even told, by Gov’t to keep rates low irrespective of high inflation that they easily blame on external influences when it’s not totally true. ie: fuel prices are not just down to the Arab uprising etc, 75% of UK fuel price is extortionate Gov’t tax.
Re the UK’s BOE, Mervyn King and Co have reacted too late to either raising or lowering rates on 2-3 previous occasions, they don’t always get it right, they pay lip service to savers’s complaints, say they sympathise, but basically stick 2 fingers up to this huge group who could help the economy. Then, Mervyn King gets a Knighthood, whilst both he and some other MPC members travel 1st and Business Class around the world on their rather huge salaries which have not been reduced, and receive constant hospitality offers. This is a fact because a friend asked them to disclose certain information under the Freedom of Information Act 2000, which they did, a potential banana skin for King and Co once it’s leaked out.
Rant over
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Angie
although I agree that savers have not been treated well (I am one of them) I believe that it would have been catastophic for the UK if they had put interest rates up over the last few years.
The pound would have appreciated making imports cheaper and exports more expensive all at a time when countries are fighting one another to stimulate their economies through increased exports. It would also have had a very negative impact on the UK housing market and on homeowners’ ability to pay their mortgages and would have left them in a perilous financial position (Yes I do accept that low interest rates also have distressing effects on savers/pensioners). I think successive governments have looked at the wider picture and yes they have sacraficed savers. The good news if there is any is that such a policy is unsustainable in the medium to long term because without savings then there is no fund of money for investment (unless UK plc competes for funds in the international market)
In terms of countries in the eurozone it is true that some like Spain are suffering because the ECB is putting up interest rates in order to avoid an overheating in the eurozone economy. This has resulted in the euro appreciating against the pound and of course making you and I look very carefully at our pennies or euros when we go on holiday in euroland.
Personally I don’t think it will be too long before interest rates begin to edge up in the UK
In terms of what the relative value of the pound will be against the euro in the future then I think everyone is in the land of quesswork
Richard
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rt21, I agree that interest rates had to be kept low for internal & external factors. However the problem here are the banks. If one is lucky enough to be able to borrow on a extremely secured collateral the rates are around 5.50%. The same lender if one wishes to deposit funds with. One will be struggling to get more than 0.50%.
Britian, has to go to the international money markets as by nature we are not big savers. The biggest savers in the Western world are the Italians. I have seen this with my Italian friends.
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