For a while I have been expecting the pound’s value to plummet against the Euro, possibly to something like 80p to the Euro, thanks to our huge budget defecit and well, screwed economy.
But I forgot about the effect of countries like Greece, Portugal, Ireland and Spain on the Euro itself.
Those countries are closer to economic collapse than the UK (as we just spent £200billion on papering over the cracks to try and help Gordon Brown get re-elected Hugo Chavez style) and had they not been in the Euro their currencies could well have been devalued by now – at least in the case of Greece anyway, and then the others could follow suit as market jitters went elsewhere.
Hence worries about several Euro-zone countries could lead to the Euro becoming significantly weaker.
Whether that would translate into cheaper holidays to Ibiza or worries about the UK economy would just translate into both currencies equally losing value, I’m not sure.
If I remember correctly, The World Bank thinks the long-term Pound-Euro exchange rate is circa 1.3. It would be nice if it got back to that level.
Time to cheer that we are not the only very badly run economy in Europe 🙂
The link in the title goes to some very mis-guided opinions on the BBC website about Greece being bailed out by the EU.
Which I am fully against.
It is like me taking out loans for £50k, spending on prostitutes and cocaine, and then asking my friends to bail me out when my creditor’s want their money back.
Not that I am incinuating that those high up in political institutions in any country would ever spend their (taxpayer’s) money on prostitutes or cocaine.