will prices go up or down
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07-11-09, 03:00 PM
Join Date: Oct 2009
Prices will continue to go up.
Not because of the 'Super Europe' but because of 12 years of Gordon Brown at the helm the UK is broke and the currency weak. The euro area has a positive balance of trade and significant reserves. Many companies continue to trade on the hope that sterling will recover in the medium term and are taking the losses on their own balance sheets. At the moment a simple arbitrage calculation shows that many businesses are effectively trading on a notional exchange rate of something between €1.30 to €1.50/£ when the real rate is €1.10/£ or thereabouts.
As an inhabitant of France this means that just about everything imported from outside the EU that you can think of (yes including cameras) is much cheaper for me if bought from the UK, around, as you may have guessed from the previous sentence, 30% cheaper in most cases.
This means that the decision not to join the euro when it started was probably the worst fiscal decision made by any UK government in at least a hundred years, if not the biggest ever. You only have to look to total basket cases like Greece and Italy to see how having the euro as their currency has protected them from (worse) collapse.
Unless interest rates are raised significantly and soon the only way for UK prices to go is up. Sorry.
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