The pound is falling in value and is now worth $1.23 and a few moments before writing this was worth 1.09 euros.
At the same time the FTSE 100 index (the UK’s key stock exchange) is rising.
Is it good news or bad news? Really this depends on what you plan to do with your pounds, euros or dollars.
If you are going on holiday to the US or to Europe, your coffee, beer, plastic donkey or baseball cap will cost you more. If you are visiting Britain from the US or Europe the same items will cost less, but you are unlikely to buy a plastic donkey.
If you are selling these items to tourists, or if you are selling brake pads to car manufacturers you might be worse off, you might be better off. It depends which way the money is going.
What can be done?
It is difficult to decide on a strategy without information, but businesses know that they cannot wait. Banks are opening small offices in Europe or strengthening existing operations to deal with transactions in euros (RBS has applied for a German banking licence and is developing its Frankfurt operation). Insurance companies are opening offices to deal with European investments and transferring funds to European subsidiaries (Standard Life propose utilising their Dublin operations to manage European investments). Airlines are doing similar things (easyjet is registering aircraft under the existing easyjet Europe brand for use in European flights).
Quietly, and without fuss, operations are moving from the UK to EU states.
What is happening and why? How do changes to the pound affect your business?
Vocabulary Find words in the text to match the meanings - highlight below for solutions to fall in value – to be worth less to rise – to go up to be worth more to be worth – to have a value brake pads – part of the braking system in cars worse off – having less money better off – having more money to depend on – to be changed by circumstances to strengthen – to make stronger, to invest more a transaction – a purchase or sale to transfer (funds) - to move (money) without fuss – not making big announcements