More uncertainty surrounds the Euro. Currently, the Euro is at its lowest level against the dollar at any time in the last 11 years. The Euro is our nearest currency neighbour, so how does it affect British consumers and British business when it isn’t performing strongly?
Currency markets affect every element of business, whether we expect it to or not. Many of Clarendon’s guests, for example, are multinationals and use our serviced apartments for workers travelling the globe. The ebb and flow of the currency market impacts on their confidence and their willingness to do business. When the pound is strong, London is seen as a great place to trade with. When uncertainty surrounds it, global firms get twitchy which can impact everyone, from financial HQs and banks to tourist attractions, bars and restaurants. London is often seen globally as the gateway to the Euro as it is a global financial capital and also has close proximity to the Eurozone so inevitably the strength – or otherwise – of the Euro will impact on the number of people coming to do business in London.
For the UK the weakening Euro means the pound now buys E1.34, which is good news for those with the pound. A cheap Euro can encourage investment from overseas and with the UK sterling having more buying power it strengthens London’s position as a gateway to Europe and the Eurozone: Buy the pound and get more bang for your buck on the continent. Greater spending power can mean more projects getting underway, more purchasing of land and property as well as increased market activity.
However it isn’t all good news. The root at the heart of the weakened Euro is instability and that’s not a state of affairs that’s popular in the financial markets. Financiers don’t like uncertainty. Financiers are trying to strengthen the Euro and a programme of quantitative easing has been proposed; essentially when the European bank prints more Euros to flood the market. After the downturn this method has a mixed reputation so while some markets will see it as good news others will not be so confident.
For British consumers and businesses, Europe is the biggest trading partner, so a weakened Euro isn’t necessarily good news for firms which do business in Europe. However for those looking to travel to the continent it raises the prospect of cheaper breaks and spends abroad. This is good not only for holidaymakers but also businesses looking potentially to expand into the Eurozone on a fact finding mission or research; it’s cheaper to do so and now is the time to find out whether it’s a good idea or not.
Clarendon’s guests who are getting into London might find the lower rate an attractive enticement to extend their stay and take the Eurostar or a flight into Europe and spend some time in the continent during their stay. A little bleisure – mixing business and leisure – is always more attractive when rates are lower.
Uncertainty surrounds the strength of the Euro and it’s likely the ongoing situation will impact on oil costs as well as visitor numbers and the financial markets. Whether the programme of quantitative easing works, remains to be seen, but for the time being the rates have never been so good for British businesses. Enjoy them while we can and hope that the Euro strengthens again soon.