Euro future for Britain?
Updated on 17 January 2008
As the pound has been depreciating against the Euro Faisal Islam asks if sterling has become the lifeboat of the British economy.
You don't get much more polished than a powerboat being prepared for the London boat show. This is a manufacturing industry at which this island nation still excels - £3bn of total revenue last year, exports up 12 per cent.
But with the world economy heading for choppy waters, who can splash the cash on a luxury boat?
Beyond luxury boats, there are general jitters over economic slowdown, and over rising prices. But an industrial lifeboat of sorts has been quietly launched - a sliding pound, which this week reached record lows against the Euro.
One expert says that some of the pungent qualities of the US dollar have now transferred over to the pound sterling - indeed at nearly 6 per cent Britain's trade deficit is now even worse than America's.
The last Sterling slump against a broad basket of currencies was during the ERM crisis after that the pound rallied as Labour assumed office and made the Bank of England responsible for monetary policy heralding a decade of remarkable sterling stability.
But the pound has slumped by 9 per cent in the past six months, the fastest slump since that ERM crisis. Back at the boat show Britain's biggest boat builder, Sunseeker, isn't feeling the pain.
But the economists are now predicting the pound falling against the dollar too, after all despite the boat industry's export efforts, our trade deficit is now worse even than America's. The sun appears to have set on a soar-away sterling.
