UK theme parks from another point of view!

 
AstroDan

The Exchange Rate!

Thu Dec 04, 2008 8:35 pm

Today, the Pound briefly fell to its lowest ever value against the Euro, reaching €1.14 = £1.00, before regaining a cent - closing at €1.15 = £1.00. This marks a striking difference to the €1.45 = £1.00 being enjoyed by Brits abroad in Europe just 18 months ago. The rate is as low as €1.07 = £1.00 from some High Street bureau de change. The interest rate cuts are merely making the situation worse, and if rates are cut even further in the coming months, then the stark possibility of a Euro being worth more than £1.00 is becoming a potential reality.

In addition, the rate against the US dollar has fallen sharply, to $1.46 = £1.00 - tourists collecting around $1.39, the lowest rate since 2001.

From BBC News:

Pound volatile after interest cut

The British pound has regained some ground after a one percentage point cut in UK interest rates.

In the run-up to the decision, it fell to a historic low of 1.1499 euros, but later moved slightly up to 1.1561.

The UK currency also dropped against the dollar to $1.4471, the lowest level in almost seven years, before rising to $1.4657.

In July, the pound was trading at more than $2, but it lost ground as the downturn hit the UK economy.

On Thursday, the pound also hit a new low in more than 13 years against the Japanese yen.

At the same time, the euro rose slightly against the dollar, to $1.2734.

The Bank of England slashed UK interest rates to 2% on Thursday, the lowest level since 1951.

However, analysts said the cut had been already priced into markets, as it was in line with expectations.

"Over the next few days the market will view this as a good move and we could see a little upside for sterling," said James Hughes, markets analyst at CMC Markets in London.

"But once consensus builds that there will be more cuts in January or February, then it is likely to come under pressure once more," he added.


:(
 
BIan
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Re: The Exchange Rate: Doom and Gloom for Tourists

Fri Dec 05, 2008 7:25 am

If only we had joined the Euro when it was high.

On the flip side, this is really good for UK Manufacturing business that export to Europe, and for the UK toruist business as it makes it a lot cheaper for people to buy stuff and gives tourists more money to spend if they visit the UK.

Makes you wonder if its worth buying some Euros now, instead of waiting til April next year though.

Ian
 
Simon

Re: The Exchange Rate: Doom and Gloom for Tourists

Sat Dec 06, 2008 2:35 pm

Oh leave it out, Dan. I get enough 'doom and gloom' reading Robert Peston's blog, without you joining the fray :roll:

:D
 
AstroDan

Re: The Exchange Rate: Doom and Gloom for Tourists

Wed Dec 10, 2008 10:13 pm

Just seen the news.

Today

£1.00 = € 1.13

The lowest on record. An analyst said that the £/€ could be in parity in mid-2009 (i.e. £1 = €1).

:(
 
BIan
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Re: The Exchange Rate: Doom and Gloom for Tourists

Wed Dec 10, 2008 10:19 pm

And thats the Big Business rate, I hate to think what travel agents will be offering.

Good news for UK holiday resorts.

The rate is 1.136 but thats still a massive drop when i was 1.4 12 months ago.

Might have to start looking for a job in Europe.

Ian
 
Chris W
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Re: The Exchange Rate: Doom and Gloom for Tourists

Wed Dec 10, 2008 10:20 pm

We went to Disneyland Paris in November 2007, we got £1 to €1.34.
We went to Disneyland Paris in October 2008, we got £1 to €1.21.

We aren't planning on going to Europe this year because of the really bad exchange rate, the holiday this year cost a lot more compared with 2007.

Its not good for all you Europa Park travellers, the value of the holiday will be some much less compared with past trips.

Post Office are offering: 1.1070.
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BIan
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Re: The Exchange Rate: Doom and Gloom for Tourists

Wed Dec 10, 2008 10:26 pm

At least Flash Gordan saved the World, or thats what he thinks anyway :P

[url=http://news.bbc.co.uk/1/hi/uk_politics/7776187.stm" target="_blank]http://news.bbc.co.uk/1/hi/uk_politics/7776187.stm[/url]

And to make matters worse, The germans are attacking the goverments spending plans

[url=http://news.bbc.co.uk/1/hi/business/7776462.stm" target="_blank]http://news.bbc.co.uk/1/hi/business/7776462.stm[/url]

Ian
 
Crofty

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 7:04 am

"Disco Ball" wrote:
We aren't planning on going to Europe this year because of the really bad exchange rate, the holiday this year cost a lot more compared with 2007.

Its not good for all you Europa Park travellers, the value of the holiday will be some much less compared with past trips.

Post Office are offering: 1.1070.


Is it really worth visiting somewhere you don't really want to go just to save a couple of quid on your cheap beer? I know a load of people who went to Turkey and Bulgaria this year and yes the holiday was cheaper but the place was a sh!t hole.

Even when the pound becomes equal to the Euro a half litre Erdinger will still only cost £2.90 in Europa, Candy floss will still only be a Quid.

If we are so concerned with a bargain break we should all bugger off to places like Zimbabwe.
 
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 7:34 am

It will all eventually come full circle, and sterling will start gaining value again, just question of when.

I remember back when sterling crashed out of the exchange rate mechanism. Concern then was that the £ could be in parity with the US dollar after it went in to freefall. Never got that low thankfully, and we still get the occasional rallies past the $2 mark.

The experts don't always get their forecasts right, hopefully this will be another one they get wrong.
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AstroDan

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:13 pm

Of course it will regain ground in the coming years, but, again today, the BBC are now holding this as their top news story with the Euro today at €1.12 = £1.00 - and on the high street it's around €1.07 = £1.00.

I thnk that even though you could say "it's only a few quid" - well on cheaper items, yes. But on your admission ticket to Europa-Park, say, it's around £7.00 compared to 18 months ago. Add that to your accommodation at Hotel Colosseo, for example, and a 3 night break is suddenly costing you an extra £50. Those Cocktails used to be £6.50 - now, suddenly they are £9.00.

Add it all together, and you have a much more expensive little break! However, it can be somewhat relieved if you pay cheap rates for flights etc.

The bottom line though, is that anything bought in the Eurozone now is approx. 25 to 30% more expensive now than it was in mid-2007. If home prices suddenly rose by such amounts, people would go into poverty in their millions so it is a significant change.

On the bright side, Alton Towers is no longer the most expensive theme park in Europe! That award certainly now goes with Disneyland Resort Paris or Parc Asterix!
 
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:22 pm

Maybe if Gordon hadn't hadn't spent all the money before the Credit Crunch the pound wouldn't be in such a free fall!
One of the main reasons it is is because we know are going to have to borrow billions and billions of pounds.

And if we had been at the Euro at this point we'd be in an even worse position that we are because the ECB controls monetry policy across the whole of Europe and so Britain would not have been able to set it's own monetry policy such as interest rates to try and correct our own situation, and instead we would have been locked into what Poland or France wanted to do etc. and all of them are in different situations.
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AstroDan

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:26 pm

It's easy to blame the PM, Liam - but there are many, many factors that affect this than just our borrowing. Obviously it is a contributing factor, but there are others, too. The actions of the ECB also have a major impact. And, it's nothing particularly new... in 1995/96, under previous governments, the pound fell to historic lows of 7FF (French Franc) = £1.00, which equates to a similar rate to the current €/£ rate. These things are not new, they come around in almost 10-15 year cycles, for a variety of reasons.

Some analysts are expecting the Euro to weaken when the ECB next cut interest rates, although this will depend on what the Bank of England do.
 
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:38 pm

Anyone who fails to see Gordon Brown's fault at the heart of the UK's current position is kidding themselves. Debt of £1trillon within a few years - can you not contemplate how long that will take to pay off? Every single penny has to come from a taxpayer. The majority of other countries built up surpluses during the boom, Brown did the reverse and dug a defecit! The IMF and ECB etc say that if a country already has a major budget defecit then it should not attempt a fiscal stimulous. Brown is ignoring this advice and claiming that he is saving the world instead. Brown also sold off the UK's gold reserves right at the bottom of the gold market. He was a wreckless chancellor, and is a wreckless Prime Minister. Oh, and it's now widely considered that the VAT reduction was a mistake. Not to worry, only £12billlion added to the I.O.U.

I concede that the pound falling isn't a particularly bad thing in itself (indeed it can be very good for UK manufacturing) however Brown is the one who cas caused the suddeness of the free fall. And for that reason it's ultra important we don't get sucked into the Euro. It's much easier to correct your own mistakes when you are in control rather than when you have your hands tied up.
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Simon

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:45 pm

"Liam" wrote:
One of the main reasons it is is because we know are going to have to borrow billions and billions of pounds.

And if we had been at the Euro at this point we'd be in an even worse position that we are because the ECB controls monetry policy across the whole of Europe and so Britain would not have been able to set it's own monetry policy such as interest rates to try and correct our own situation, and instead we would have been locked into what Poland or France wanted to do etc. and all of them are in different situations.


Your remarks seem to suggest that the borrowing is the main cause of the slide, but things are not as simple as that, and people who don't know a lot about Economics could be misled. Currency markets show a lot more fluctuation based on speculation and confidence. The general feeling is that the UK's plan to deal with the recession is more risky than other governments in the Eurozone, so the slide is as much due to the pound falling as the Euro rising.


It is true that, in the current set of circumstances, Britain's membership of the Euro would not be beneficial, and we would likely not weather the economic storm well without control over our own monetary policy.

But again, your argument is misleading, because if Britain had been a member of the Eurozone before the downturn/recession began, it would have been unlikely to yield the same set of circumstances that we now find ourselves confronted with.

"Liam" wrote:
free fall


A little dramatic. On Black Wednesday the currency went into free fall. We are nowhere near that.
 
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Liam
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 4:57 pm

Your remarks seem to suggest that the borrowing is the main cause of the slide, but things are not as simple as that...
Yes. The "main cause" infers there are extra causes, so what are you trying to say?
The general feeling is that the UK's plan to deal with the recession is more risky than other governments in the Eurozone, so the slide is as much due to the pound falling as the Euro rising.

Surely you've just proved my point :P. Ie. that UK borrowing is more risky than others, and thus the main cause. Of course everything is reletive when talking about currency.

But again, your argument is misleading, because if Britain had been a member of the Eurozone before the downturn/recession began, it would have been unlikely to yield the same set of circumstances that we now find ourselves confronted with.

Indeed, we would be stuck with Eurozone interest rates and other measures but would be in a far worse position budget wise than the rest of the zone. I suppose though this can't really be argued as it would all depend on when you see the UK retrospectively entering the Euro - so cancel that... but it is very interesting to see Germany squirming and getting worried that they'll be bullied into supplying the eurozone with the bulk of its stimulus when it doesn't want to. That's a major negative of being in the Euro for a big economy such as ours and Germany's.

A little dramatic. On Black Wednesday the currency went into free fall. We are nowhere near that.

It's widely considered to be falling fast in a short period of time. The Black Wednesday fall will probably end up being better than this fall in the long run though as it was quick and the recovery began straight away. This one looks like it will drag.
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Simon

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 5:32 pm

"Liam" wrote:
Yes. The "main cause" infers there are extra causes, so what are you trying to say?

Surely you've just proved my point :P. Ie. that UK borrowing is more risky than others, and thus the main cause. Of course everything is reletive when talking about currency.


I'm stating what you didn't state for your own rhetorical effect. It is not the borrowing that is the main issue, it is the confidence in the government's plan that is, and on the whole, the consensus among economists is that the government's plan is risky. No-one (as far as I know) has said that it won't work.

"Liam" wrote:
The Black Wednesday fall will probably end up being better than this fall in the long run though as it was quick and the recovery began straight away. This one looks like it will drag.


The myriad of outcomes stemming from the current situation is so large that it makes any sort of speculation like this quite meaningless. Things are not always better when you can see the bottom, and anyway, as I recall, Black Wednesday was a beginning, not an end.
 
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Liam
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 6:01 pm

I'm stating what you didn't state for your own rhetorical effect. It is not the borrowing that is the main issue, it is the confidence in the government's plan that is, and on the whole, the consensus among economists is that the government's plan is risky. No-one (as far as I know) has said that it won't work.


:P But surely confidence in the plan is directly proportional to how big the plan is in this case, i.e. how much is borrowed. The whole point is that we can only borrow to even have a plan at all because Gordon didn't save any money. So you're trying to seperate the inseperable.

I've heard lots of people saying it won't work effectively. If you're trying to stimulate the economy, it's not good to heap a load of tax on everything and everyone just at the point where the economy is starting to grow again (2010-2011).
Surely that just slows down the recovery, and then stifles future growth for a long time considering £1tillion has to be repaid?

Whatever happens the Government will say its plan has worked, won't they? Because at some point the economy has to recover, and with the amount of borrowing it has no choice to. The real question is, is this the right way to do it? Afterall it's not doing much to tackle the actual Credit problem that caused the whole thing.
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AstroDan

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 6:03 pm

Is there such a thing as the right way? In times of crisis, the "perfect" answer may frankly be nothing more than an unrealistic dream.

One would assume that the people working with the Government on this, are experts in the economic field, and advising them as their expertise would dictate.

The Government are not hear to play games, and they certainly wouldn't want to harm the UK.
 
Simon

Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 6:31 pm

"Liam" wrote:
But surely confidence in the plan is directly proportional to how big the plan is in this case, i.e. how much is borrowed. The whole point is that we can only borrow to even have a plan at all because Gordon didn't save any money. So you're trying to seperate the inseperable.


I don't think I am because I would argue that economic confidence and risk are allied to economic circumstances, not to economic actions. In other circumstances, the same levels of borrowing might be considered a lower risk.


"AstroDan" wrote:
One would assume that the people working with the Government on this, are experts in the economic field, and advising them as their expertise would dictate.


I think this is an important point, and I would probably say that there are many people who have forgotten more about Economics than I have ever learned.

As far as I understand it, the government are following a Keynesian model. J.M. Keynes was one of the most seminal academic minds of the 20th Century. Sure, he had his detractors, but then it is the same in any academic field. The level of complexity were dealing with here is mind-boggling, and I don't envy anyone who has to make these sorts of decisions (even if it was Cameron/Osbourne - although if the former is going to No. 10 I'd rather he did so without the latter).

Sadly, the markets - currency, commodity, equities, property - are prone to confidence and speculation because the people running them aren't economists. Perception is king - and the UK government's plan is perceived to be risky, and therefore it's a rocky road.

Whether it is actually risky or not, or, if it is, what the level of that risk is, I would happily admit is far beyond my powers of comprehension.
 
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Re: The Exchange Rate: Doom and Gloom for Tourists

Thu Dec 11, 2008 6:34 pm

Nor are the opposition Dan, nor the scores of other people who are involved in this sort of thing. The Government aren't nessecarily right just because they are the government. And there is a right answer, it just won't be clear what that is until everything is over.

And the government does play games. They were elected on the basis of calling a referendum on the EU Constitution, and when it came to it, under the new name of the Lisbon Treaty, they rejected calls for one, and that is on something which can damage the UK in the long run.
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