City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Plummeting Pound Good For Overseas Visitors

By edg - Posted on 18 December 2008

One and Two British Pound Coins

British pensioners and those who rely on savings for income are not feeling too festive this christmas after the Bank of England reduced interest rates, earlier this month, to levels not seen since over half a century ago during the post-War years.

With UK interest rates cut to 2% in December, and destined possibly "to fall all the way to zero" according to the Bank of England deputy governor Charles Bean, interest rates are well below the rate of inflation of 4.1% (CPI, November).

High public spending and falling taxes for the UK government, due to the credit crunch, are driving the British Pound down to unprecedented lows.

There is a silver lining though: overseas visitors to Edinburgh are benefiting from a plummeting Pound. The Pound has hit its lowest levels ever against the Euro and some financial analysts are now talking about the Euro and Pound hitting parity.

The Pound has fallen by 20-40% against major currencies in recent years and many commentators say conditions are right for it to continue falling further.

The Slippery Slope For the Pound

  • Against the the Euro the pound is now close to parity after falling over 25% since last year
  • Against the US Dollar the pound has fallen over 25% since its highs of last year
  • Against the Canadian Dollar the pound has fallen over 20% since last year and 40% since 2004
  • Against the Swiss Franc the pound has fallen around 35% from highs last year