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Holidays hit as pound sinks to an all-time low
Sri Carmichael, Consumer Affairs Reporter18.12.08
STERLING plummeted against the euro to a new low in early trading today as one pound after commission bought less than one euro for the first time.
Holidaymakers and business travellers were faced with the dire exchange rate at the Travelex bureau in London City airport.
The Standard paid £99.98 for just 97 euros last night as sterling continued to plunge to all-time lows against the euro.
As thousands prepared for Christmas holidays, experts warned that things would get worse and that further falls could be expected.
European breaks now cost up to 30 per cent more than this time last year, when travellers enjoyed an exchange rate of 1.40 euros for the pound.
The pound hovered around 1.08euros on the money markets yesterday but tourist rates are always worse. Today it slumped to 1.07euros.
Airports take advantage of travellers' last-minute panic to buy currency, factoring wide profit margins into rates and charging high commission.
Glenn Uniacke, dealer at currency specialist Moneycorp, said: “The pound has reached another record low against the euro on the back of disturbing run of form, and holiday makers are now in the position of seeing their holiday costs massively increased. It is the first time holiday makers have bought less than one euro for their pound and they are finding it a bit of shock.
“Businesses have faced the same cost increases due to the pound's weakness but have more facilities open to them such as forward contracts. The economic downturn is global phenomena, but there's a perception that the UK's problems are more acute, which is adding to the pressure against the pound, and the worst may yet not be over.”
The pound has now fallen 14 cents against the euro in three weeks as the Bank of England slashed the interest rate to two per cent in an attempt to prevent a deep recession.
Investors are choosing to shun the pound because the UK interest rate is below that in the euro zone and could yet fall to near zero. Mark O'Sullivan, dealing director at Currencies Direct, said: "This is likely to get worse as more investors lose confidence in the pound."
The gloomy economic data emerging from Britain adds more downward pressure on sterling.
The jobless claimant count topped one million for the first time in eight years yesterday as it emerged that dole queues are lengthening at their fastest rate since the Nineties recession. Short sellers are also betting on sterling continuing to fall.
Reader views (17)
No Mr Lincoln, the UK should NOT join the EU. Historically one can see for eg. that the dollar was king for many years, suddenly devalued recently and now slowly rising. Even i as a European national living and working in the euro zone wished my country had not changed to the euro back in 1999.
The UK situation will improve one day and be again one of the greatest countries in the world.
- Cath, London
It is long over due; the United Kingdom should now join the European common currency - The Euro without delay!!!!
- Arthur Lincoln, Roeselare, Belgium
this has absolutely ruined my plans to emmigrate.
What a pot hole, wish I had moved last year as planned
- Jack, london
The pound is weak because the economy is weak; the economy is weak because the Government is weak. The most impressive authority for this dictum is one Gordon Brown when in opposition. Remarkable how some things people say come back to haunt them and yet I suspect he never uttered a truer sentiment.
- James Elliott, Eastbourne UK
All we need now is for Brown to emulate Harold Wilson's "The pound in your pocket will still be worth the same" and history will have repeated itself.
Yes this is one of the largest devaluations of all time.
When can we be rid of this lunatic Brown?!?
- Titan Euranus, Guildford
Is the value of pound against other currencies not a reflection on the strenght of the underlying country? Who has mismanaged it? As for holiday, no spare £ left?
- Se14, london
Hasn't changed my holiday plans as I can't afford to go away anyway!
- Ken Joralemon, London, UK
Here is a question for Alistair Darling, Gordon Brown and David Milliband (Great supporters of the EU Dream). Do we pay our membership dues to the EU in euro's or in pounds sterling. If it is euro's then we will be paying a whole lot more in pounds sterling than the government bargained for !!! Countries that have the Euro as a currency will be that much better off than ourselves i.e. Bulgaria, Romania, Greece and Cyprus so should we as one of the new poor third world countries of the EU now get a massive rebate and a cash injection to bring our third world status up to those rich countries ?
- Dutchy Holland, glasgow
Isn't it time the word Devaluation is used? It's something that Labour Governments always end up doing to cover up their mistakes. They hope that people won't notice the effects - higher fuel and petrol prices, more expensive food etc.
- Mw, Somerset UK
I believe Frank has just given the perfect example of why this country is going down the proverbial.
Half the planet lives in abject poverty; the other half is war torn and terrorised and here we are worrying that we can't take "mini-breaks"
Perhaps getting off our backsides and doing proactive which puts into this country and its citizens would equally alleviate the "british monotony" and not rely on us being a nation of vacuous shoppers! How far the British nation has fallen!
if this is Britain - we deserve everything that is coming to us econonomically over the next 24months!
- Jc, Se1
And of course it is all George Osborne's fault for "talking down the pound" - nothing to do with the policies of Brown, Darling & Co or The Bank Of England!
- David, Lewes, East Sussex
First, never exchange your money at an airport or at a bank, you will always get a poor deal.
In 1973 £1 bought 7 Deutschmark. Just before the Euro came in, £1 bought 2.50 Deutschmark. At Euro begin, £1 bought €1.60 and now it has almost reached parity.
Sterling has had its value eroded for decades now and it will not end. If Britain is to join the Eurozone, the sooner we do so, the more Euros we got for our Pounds. Long-term, Sterling is not a currency to be in.
- Sir P, London
Just goes to show how we should have joined the euro from the start.
The question is how many pounds to the euro will it take for our politicians to see cents?
Of course with the way Boris is destroying London's future the pound wont matter any more once business transfers to mainland europe where they regard public transort as vital to keep the wheels turning.
- Melvyn Windebank, Canvey Island, Essex
my travel plans have not changed at all, and will stick to them, i am off to saint malo in fabuary and usa in june. if you change your money at the post office you get a better deal and no comission to pay.
- Robert Washington, portsmouth
Easy solution=dont holiday anywhere that has the Euro!
Plenty of nice places dont have it yet, just look further afield.
- Russell, LONDON
Life will get gloomier still in England if people can't afford to tke short breaks away to other countries to alleviate the British monotony at home. It'll be a form of cabin fever.
- Frank, England
Dont get change in big com like MoneyCorp, travelex etc, they get advantage of prime locations and you are getting bad deals!!! Today you still can buy euro 1.085 at some places. So look arraund
- Thomas, London
