The single best thing for the British economy this year would, in my view, be a long hot summer, starting in May and finishing in late September. Such a summer would encourage us to stay at home and spend our pounds at home. We need 150 days of temperatures in the high 20s. Temperatures that encourage people to stay home and spend pounds in the UK – pounds that are going to be in short supply, of course, but nonetheless, pounds that we want kept here.
Another summer like that of 2008 – rain, rain and more rain – would have the opposite effect. No matter how strong the euro, we’d all go abroad – desperately searching some respite from the gloom of the UK – and spend our weedy pounds (wait for the £100 and £200 pound note coming soon to a place near you), further negatively impacting the UK economy.
Better still would be a great UK summer and a poor European summer. The Europeans would come here and spend their Euros – more than they have even in the last month. The shift in spend would further bolster the pound and bring yet more money into the UK – and we have to be grateful already for those Europeans and Americans who have come to the UK in the last to months.
A decade ago I ran the operations of Citibank France. On New Year’s Eve back then, we were bringing in the Euro – the banking incarnation of it at least (it wouldn’t reach the hands of consumers for three years – and then I was in Austria ready to take fresh euros out of the ATM just after midnight on the first night).
I found this graph earlier showing the life of the euro versus the pound since its incarnation. It’s 2 months of data short, so I’ve added a line that approximates how the pound has fallen apart since the end of October:
What a stunning change in fortunes for the venerable pound sterling. Something needs to change very soon. As I sit in Switzerland, watching a foot of fresh snow fall, pondering a Swiss Franc exchange rate that has moved from 2.4 to 1.5 in the last 4 years – or even from just under 2 to 1.5 in the last 9 months, I can only wonder what 2009 will bring.
Here’s to a Happy New Year to everyone that I know, that knows me, that reads this blog and to those who have yet to read it who might yet still, one day.
