Do you agree that the pound is healthier than it is assumed?
You would agree with me that even though you earn the same basic pound but the purchasing power has drastically changed. In the earlier days it was cool to stay in a rented villa and still afford to visit different restaurants in the city that serve different delicacies and still pay lesser than your weekly shopping bills at Waitrose. The same is not true any more. It was just a few days back on our anniversary, when I planned a quiet dinner with my husband at the local town’s best restaurant very close to Carcassonne. We shared a bottle to wine to celebrate the evening and ordered for a few local specialty dishes. Do you believe how much did this evening cost us? A bill of £125.
It has become very difficult to enjoy a few basic luxurious in life. Even if we decide to have steak and chips in an ordinary restaurant in Limoux, you still have to shell out a whooping £50. While your stay in London everybody desires to visit the most famed St John, in Clerkenwell. Everybody wishes to visit the world 14th best restaurant in the world. It is prestigious to visit this place but be aware of the pounds that would be needed for a simple starter and pudding. You would argue that expenses have increased considerably. With the same income in hand you were able to enjoy the basic luxurious but these days it pinches the pockets. It is a common notion that this is the bleak state of affair and that is indefinite and the pound is pretty finished.
It is believed that the key reason for the collapse of the middle class dreams in Britain is the pound. You would agree that in the last one year Sterling Pound has fallen over 10% against the euro and 26 % against the dollar. The UK economy is definitely in a shocking state. This is true for the city centre and at the country side. When you visit the country side you will find that there are no buyers for property which were once sold like hot cakes. The same houses seem to be overpriced as people do not have flowing cash in hand.
It has been seen that Savills now quotes the prices of the house in Dollars as well as Euros to attract foreign clients who are ready to buy the property. The reasons for the fall in disposable income in the hands of people are numerous. Unemployment rate is rising and has already touched the 6.7 % mark. Credit conditions are very tight in spite of the interest rate cuts, money printing exercises etc. Consumptions levels are also tapering along with the house prices and savaging of personal finances. Alistair Darling has conceded in his second budget that public finances are horrible.
With the GDP falling by 1.9 % (biggest decline since 1979) in the first quarter of the year people do not know what to hold on too. There is declining values every where except in gold. You do not want to touch anything at the moment and burn your fingers. Everybody is waiting for the right moment to arrive – However, only the currency does not measure the state of the economy. Pound which was once the powerhouse currency has also been falling closely. One may feel the decline in economy in UK but it is no different in other parts of the world. Yen which ahs always been the strong currency due to the rapid and continuous growth in the economy has also reported the first trade deficit in 28 years. Dollar another contender, backed by the extremely indebted government is also taking an ad hoc approach to the banking crisis. Euro who backed by a group of different countries is also facing the decline in its own way.
IMF has forecasted that while UK is shrinking at 4.1% this fiscal year, there are other countries in the euro zone which has seen a decline of 4.2%. While in Britain it may be difficult o understand why the pound may strengthen but if you look at the various perspectives of other countries you would believe that it is not easy for other countries also to move out easily from this viscous circle. The second budget that was presented had a very dismal stuff. The UK economy is declining and we have several years of austerity ahead of us. With so much that has been spoken about the pound in comparison to other currencies, I positively believe that by next year we will be able to enjoy all the luxurious of dining and buying a five bedroom apartment in Dulwich in a cost less than it did in this year.