UK News

Insights from the UK and beyond

from Hugo Dixon:

Independent Scotland won’t keep the pound

An independent Scotland will not keep the pound. That’s despite this being the express wish of the Scottish government, which is campaigning for independence in September’s referendum. The reason is that it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.

One can understand why Edinburgh is keen not to change its monetary arrangements. If Scotland had its own free-floating currency, it would be less economically integrated with the rest of the UK. Given that 60 percent of its exports and 70 percent of its imports are with the rest of the UK, such a separation would hit hard.

A separate currency would also cause trouble for the outsized Scottish banking sector. Banking assets are more than 12 times GDP – nearly double the ratio for Iceland, Ireland and Cyprus before their banking industries blew up. The Scottish people might also worry that a Scottish currency could fall in value, devaluing their savings.

Joining the euro might not be any better. Like a separate currency, the euro would complicate Scottish trade with the UK, and the euro zone might be unhappy with Scotland’s relatively gigantic banks. Added to that, the euro has suffered years of terrible publicity, so promising to join it wouldn’t be a vote-winner.

from Blogs Dashboard:

A devalued pound can’t save the British economy

There it goes again. Sterling has been dropping sharply this year against the U.S. dollar and especially the euro, as Britain turns to a tried and trusted remedy for its economic problems: devaluation. Even with its slight uptick on Wednesday, sterling is down more than 6 percent against the euro since the beginning of 2013 and has slid 10 percent over the past six months.

This is not something the British government is boasting about, especially at a time when there’s concern over -- and sometimes a high-level condemnation of -- countries such as Japan that allegedly seek to manipulate their currencies. But it’s also not something the British government or the Bank of England is trying to hide – or stop.

from The Great Debate UK:

Waiting for the other shoe to drop

USA/

-Laurence Copeland is professor of finance at Cardiff University Business School. The opinions expressed are his own and do not constitute investment advice. -

The unemployed and the terminal insomniacs who have nothing better to do than read my blogs will know that I have long been gloomy about most of the Western economies. How can you fail to be pessimistic when the world economy is still dominated by the U.S. - a basket case, becoming weaker every day, with a political class too blind or too scared to admit in public the obvious fact that the country cannot carry on living beyond its means?

from The Great Debate UK:

Bank of England Inflation report offers markets a reality check

-Mark Bolsom is Head of the UK Trading Desk at Travelex Global Business Payments. The opinions expressed are his own.-

Sterling tumbled to a one week low against the dollar in trading this morning, after the Bank of England delivered its latest quarterly inflation and growth forecasts today.

from The Great Debate UK:

Sluggish U.S. economy may threaten UK business development

- Paddy Earnshaw is the Director of Customer Relations at Travelex Global Business Payments. The opinions expressed are his own.-

British importers and exporters’ confidence in the economy leapt in July, as positive economic data fuelled hopes for a return to strong economic growth. According to the Travelex Confidence Index (TCI), which jumped 12 points in July to 116, from 104 in June, strong gains were driven by quarter 2's GDP figure, as it showed the UK grew at its fastest pace in four years.

Tories could be making sterling a rod for their own back

Photo
-

BRITAIN-CONSERVATIVES/Talking down the pound could have some pretty bad consequences.

Ever since the debacle of sterling being forced out of the European exchange rate in September 1992, British officials and politicians have maintained a stiff upper lip when talking about the pound.

The Conservative government spent billions of pounds and jacked up interest rates to defend the currency back then, but to no avail. The party’s reputation for economic competence was lost, paving the way for Labour’s big win in 1997.

Is powerful Mandy talking up the euro?

Photo
-

When Prime Minister Gordon Brown reshuffled his cabinet last week, fending off a challenge to his authority, a significant outcome was the creation of one of the most powerful ministerial jobs Britain has seen in years.

 

Peter Mandelson, a former European commissioner who has twice served in British governments in the past and twice been forced to resign, was reconfirmed as secretary of state for business, but also given greatly expanded authorities that make him a powerful if unofficial number two to Brown.

Of course it’s genuine — I made it myself

Photo
-

tails.jpgEveryone, surely, would love to have a licence to print money. Well, one man has taken the concept to a whole new level. It might sound bonkers, but Sheridan “Shed” Simove has created his own currency.

“It makes the world go round. Oh, and it’s the root of all evil. Although strictly, the love of it is actually the root of all evil,” he writes in his new book, “Ideas Man: The Amazing Real-life Adventures of a Modern-day Creative Genius“. “Yes, I’m talking about the basis of our capitalist society, the units of exchange we use to obtain material goods — MONEY.”

  •