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The pound is on the brink


Chancer
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Quillan, the answer is that the £ will probably be boosted, as a more bouyant US, France and Germany will boost UK exports. With the devalued £ the UK is in a much more competitive situation, but needs recovering export markets to take advantage of it.

The poor growth figures last week published by the UK were only a provisional estimate and everyone is expecting them to be improved when the final figures are published and next years growth forecast for the UK are in line with France. Notwithstanding France has come out of recession before the UK, that is not much comfort, as French unemployment is still worse than the UK and the gap is expected to increase as the service secor in the UK improves. Unlike Germany , France does not have the same insulation from the strong Euro, as German manafacturing is more high end and less sensitive focussing on electronics and up market car manafacturing companies like Mercedes and BMW. A customer who can afford a new Mercedes is less price sensitive than a customer looking to buy a Renault. That is why President NS called the current $ to Euro rate catastrophic earlier this week.

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Italy and the UK were the only two countries left in reccession. So much for Brown saying that the UK was better placed than most countries to weather the storm. The elections can't come soon enough, only I hope Osbourne is carted off to the Sun newspaper before then in respect of his awful atempts at populism.

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[quote user="gardengirl "]I remember reading a number of times that several countries were in worse state than us; Italy, Spain, Greece come to mind. Does that mean that  they are all ticking over better now? Or maybe what I'm thinking of is things like umemployment levels etc.[/quote]

People claiming that the UK is/was better of than xyz only look at one thing: Total debt of the UK government at the start of the downturn because that was the only good figure in the UK economy. (ca. 40% of GDP)

They tend to forget that the UK has the worst structural deficit, the worst household debts, the worst banking system,  printing the most money ( as % of GDP), has the highest inflation ( and claim it as good )  , tiny industrial production, low tax income and relatively small export.

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Compared with which countries Jako? Clearly you are discounting countries like Ireland, Greece and Spain and ignoring unemployement figures, which in some EU countries are double that of the UK. The perception that the UK has a tiny industrial production is a fallacy not borne out by fact.

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Agreed Sprogster. Industrial production is the same in UK/France/Germany, within a gnat's whisker, but hey-ho let's not let the facts get in the way. I'm not bothering adding links again, as nobody reads them.

NB the Guardian article is 6 months old and refers a decline mirrored globally. German industrial orders were down 68% in the same period, they don't look at production, so they don't know how that declined.

Funnily enough France's finances are in the spotlight today. "Grand Loan" that's a euphemism for illegal state aid.

http://www.bloomberg.com/apps/news?pid=20601085&sid=a3Yp0nvS1CA8

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[quote user="Sprogster"]

Compared with which countries Jako? Clearly you are discounting countries like Ireland, Greece and Spain and ignoring unemployement figures, which in some EU countries are double that of the UK. The perception that the UK has a tiny industrial production is a fallacy not borne out by fact.

[/quote]

Real unemployment in the UK is at 15%, not much better than Spain.

People who compare Eurozone figures to the UK are usually forgetting the devaluation of the pound.

When German production is down 15%  and in the UK 'only' 10 % in one year you need to recalculate these figures to the same currency over the same period, hence add 20% to the UK figure because the pound dropped 20% in value to the Euro.So in real terms the 10% decline of the UK is double the 15% decline in Germany. Same for Ireland. The Irish economy has already stopped shrinking despite/thanks to the Euro. The UK economy is still shrinking, despite a weaker pound and massive QE.

Don't take a very,very small economy like Greece into account. Although the UK economy is now smaller than Italy, it is still a major economy. [:)]  

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15%? The ILO don't agree, they say 5.7%, they compile the figures, the Government provide a "Claimant Count".. How have (now) 4 of my wife's (french) nephews/neices found jobs in the UK in the last 2 months, after no work for over 6 months here, not even a McJob. 2 of them don't even speak English, one of whom arrived on spec, and had a job within 3 days. None, except 1, of them have got any particular, in-demand skills. Maybe they should have gone to Italy?

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[quote user="velcorin"]

15%? The ILO don't agree, they say 5.7%, they compile the figures, the Government provide a "Claimant Count".. How have (now) 4 of my wife's (french) nephews/neices found jobs in the UK in the last 2 months, after no work for over 6 months here, not even a McJob. 2 of them don't even speak English, one of whom arrived on spec, and had a job within 3 days. None, except 1, of them have got any particular, in-demand skills. Maybe they should have gone to Italy?[/quote]

velcorin, this interests me as I am subsidising a daughter in England. Yes she has a job but doesn't earn enough to pay for her accommodation.

What sort of jobs have these young French people got themselves.Are they 'proper'jobs? Can they fully support themselves on what they are being paid?.

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They only went to areas where we have good contacts, accomodation was organised in advance, in shared houses. Swindon/Newbury/Reading, we steered them away from London as too expensive.

Apparently the unemployment rate has gone up by 50% in Newbury in the last 12 months. 0.8% to 1.2%. Wow, that's dreadful, appalling, how do people cope?

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I just read HERE that the last French bank (Société Générale) has paid back the money the government gave them to help them out when all the banks went pear shaped. In all it seems the government injected some €19.8bn and now its been paid back. How are the English banks doing, have they given the tax payers their money back yet?
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Dear Russethouse it is part of the story at least. However for all of it to happen guess what some well-heeled banker has to get involved and whilst their fees will be probably just 1% or less then their fee income will be huge. That goes as well for those highly intelligent colleagues of mine in the legal profession (they not I) who will put together the contracts and the like.
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[quote user="dragonrouge"]Dear Russethouse it is part of the story at least. However for all of it to happen guess what some well-heeled banker has to get involved and whilst their fees will be probably just 1% or less then their fee income will be huge. That goes as well for those highly intelligent colleagues of mine in the legal profession (they not I) who will put together the contracts and the like.[/quote]

There's just no stopping that gravy train for the rich privileged minority. But then, isn't that the intended way of the new world order?

Where will it all end up? For a good example look no further than the 2 main cities of Brazil!

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  • 4 weeks later...
This thread has gone very quiet,  maybe because all that can be said has been said,  or maybe because many have accepted that £ = €1.10 is the flavour of the brave new world....

I'm minded to post though,  having just sent £5000 via 4X Dealer to France and getting €5461.   That's about FF 7.15  to the £.    I can remember at the nadir of the currency crisis of 1976 ish when Healey was forced to run to the IMF when we thought FF 8.04 to the £ was the worst depth that our British humiliation could plumb.  How wrong we were....

Anyway,  whilst it grieves me to receive so few euros today,  I've gone ahead because - to be honest - I'm *** scared that it's going to get worse  (maybe we'll get a hung parliament who will be powerless to do what we all know needs doing).   An even worse scenario would be exchange controls.  I'm not sure how these could be implemented in this global age,  but I'm sure they  +could+  be if sterling's slide became a rout.  

Whilst there is no sign of a gilt strike at the moment,   Britain seems to be in an even worse mess than most of our competitors (I'm leaving aside the Greeks and the Latvians) and it leaves me pretty scared about what 2010 will bring.   At least I've got another €5461 in a country in which I have a lot more confidence than my own.  Sadly.

So please -  bring out your crystal balls.     Please let's have a few 2010 predictions,  and NOT  so that we can all score points off each other this time next year ('cos I think one or two people who knew a lot on the subject left the topic in haste after it became heated and a bit petty,  which is a pity!).

I ask because I hope there are people here who can cheer me up and convince me that my doomsday scenario is overdone.

Now how about a holiday in Dubai....??!!

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Martin, I for one am very pleased that you have revived this thread.

As I am contemplating buying another French property (paying in sterling but fees in euros), I was just thinking how uninspiring the UK economy is looking.  And, as you say, there is the uncertainty of the General Election.

I read only a day or two ago, that the UK economy is now the 7th largest in the world whereas until about a year or two ago, it was still the 4th.

These are indeed scary times and only the really well-off would be cushioned against what's to come.  In some ways, I envy those who have managed to sell up (like my Brit neighbours) and gone back to the UK. 

On the other, I don't think I particularly want to go back to live in the UK at this time.  The phrase "between a rock and a hard place" comes readily to mind.

Yes please, you knowledgeable ones out there, do give us the benefit of your thoughts.

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At the beginning of the year I thought we'd end at about 1.20 but oh how wrong I am, for next year we're budgeting parity but hoping for things to carry on as they are. The change for us is we've put the next phase of the renovation work on the back burner and just do what we can physically do ourselves, unless of course our earnings in Euros are sufficient to progress further faster.
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[quote user="Martin963"]This thread has gone very quiet,  maybe because all that can be said has been said,  or maybe because many have accepted that £ = €1.10 is the flavour of the brave new world....[/quote]

As somebody said work on parity for the time being, anything over is a bonus. As for next year anywhere between 1.10 and 1.15 for most of the time (I hope). Still look on the bright side, if you haven't already done so, theres some reasonable (in comparison to normal saving accounts) one year bonds in the UK and the savings accounts in France are better than the UK I believe.

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I for one had hoped that the pound would have stabilised in the 1.20/1.25 range by the next election. Now I am more pessimistic and fear that the next Euro Bank rate rises will push sterling bellow parity.

Of course if the cretins in charge decide to attack Iran and oil skyrockets the relative exchange rates of different bits of toilet paper will then become an academic exercise.

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The BoE is keeping the pound weak. It is not difficult. The next time the £ is knocking on the door of 1.2 euros Mervyn King will say the UK's recovery is fragile and the pound will be back at 1.1 within a week. That's all that has happened for the last 12 months.

The strong euro might be hurting the eurozone but I can't see Germany or France working to devalue it for political reasons: a weak euro would start to raise (even more) questions about the one size fits all currency.

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