I know that I am supposed to write an article on my blog daily but sometimes I just don't have the inspiration! My apologizes for that! Today however, I pushed myself towards some fine inspiration! I searched for some interesting news on the Time's website and found just what I needed. The following article contains economical terminolgy that we have been handeling in the last couple of weeks. I will review the most important aspects of this article.
The pound (GBP) hit a five month low against the euro yesterday. This happened after the Bank of England admitted to expect a prolonged fall in the value of the pound against other currencies. This would be a result of the credit crisis. The Bank suspects the continious fall of the pound to possibly be a side-effect of the procress of rebalancing of the UK economy.
Britain currently has account deficits, financed by investors from other countries, who have been buying Britisch assets since the mid 90's. It is possible though, that the recession has forced those foreign investors to stop their investments. As a result, the financing of the UK trade deficit has been slowed down and possibly the long-run sterling exchange rate has fallen.
The trade deficit will make it harder for Britain to recover from this fall of the pound. As they won't have the financial powers to exploid the cheap export possibilities. The exports are cheap as the the pound is weak. Remember? S.P.I.C.E.D. stands for Strong Pound Import Cheap Export Dear. However, a decline in the trade deficits will make the pound go up again, together with the export prices!
The pound is facing difficult times!
The united kingdom is an economic basket case.
ReplyDelete