How will the Weak Pound affect the UK?
How Will the Weak Pound affect the UK?
The pound over the last year has continued to weaken against the Dollar and Euro, this is party due to the vote of the EU referendum back in June where the UK population to voted to leave the European Union. This has subsequently lead the Pound to drop again the dollar (£1 = $1.24) and also the Euro (£1 – €1.14).
What does a weak pound mean when it comes to currency you may ask? Well… a weak pound fundamentally means the UK population gets less for their money. This obviously has a significant impact on British consumers and businesses.
A weak pound means people will get less bang for their sterling with shoppers, motorists and holidaymakers hit hard in the pocket.
The tumbling value of the pound against the US dollar, euro and other currencies since Britain voted for Brexit could have a significant impact on British consumers and businesses. The drop in the currency of the pound has seen its value drop to new 31 year lows, something which the UK population thought we would never see, not in our lifetime anyway an this has caused mayhem for the Bank of England’s decision makers.
With the pounds value declining each week currently, UK exporters will be able to sell their products / goods for substantially cheaper to foreign buyers. This fundamentally means that UK business will become more competitive.
Great! Finally some good news…. Wait a minute!…
We may become more competitive because our goods an services are now cheaper, but the benefits can easily be offset if Theresa May’s Brexit negotiations result in Britain exiting the single market and the EU imposes substantial tariffs on British products and services. This would result in the UK not been competitive at all!
For companies whose primary focus is to import products and raw materials from Europe and the rest of the world, they will in turn suffer as costs will increase considerably due to the weaker pound.
Finally, one of the major things which a weakened pound affects is the housing market in the UK. Surveying firms and property professionals have all suggested that a weaker pound will result in more British homes been purchased by foreign buyers who see properties in our country as bargains.
Some housing experts have suggested a weaker pound could lead to even more British homes being snapped up by foreign buyers who see them as a bargain buy. A weakening pound could also have a knock on effect for domestic buyers in the UK as first time buyers are already struggling to get onto the property ladder.
In conclusion, a weak pound is never a good thing as it puts the UK population under immense pressure. The general consensus is we need the Brexit negotiations from Theresa May to be successful and ideally for us to somehow stay in the single market to avoid any costly tariffs on our goods and services. Until these negotiations are concluded, our currency in the pound will continue to decline as we are surrounded by uncertainty.
We hope you have found this blog insightful by Property Buyer. Property Buyer is a property buying company based in London which specialises in purchasing residential property quickly for cash. If you want a free no obligation cash offer, contact the property buying team on 0208 0033290.