GBP against the Euro

[TheFaQQer]

So, pound would have dropped much earlier at the time when oil was hitting $150 per barrel, so if that happened then people would have been paying £2 per liter of fuel!

At least now oil is around $50, better devalue currency now rather than 1 year ago.

litre

HTH

[Cyberman]

So, pound would have dropped much earlier at the time when oil was hitting $150 per barrel, so if that happened then people would have been paying £2 per liter of fuel!

At least now oil is around $50, better devalue currency now rather than 1 year ago.

Not necessarily. The economy needed a boost and a rate drop would have put a lot of money into people's pockets and for many they would have been able to afford increased fuel charges. Coupled with that, it takes 6 months for rate cuts to really take affect because many are on fixed mortgages(50% of people I believe), and even now those 50% will have to wait months to see any benefit.... and that means that the economy is also held back for that time.
Other fiscal measures such as tax cuts should also have been done months ago because it was clear that the credit crunch was forcing us into a recession. GB has acted too late and now we see the consequences.

[AtW]

Not necessarily.

If BoE dropped rates big time last year when other countries held them, then there would be massive flight of capital outside of UK (pound will drop) and inflation will be imported big time - commodities peaked this year, so devaluing currency just before that would have been insane.

I doubt it would have made anything for economy either - like the falling pound now is only causing troubles - there is not much manufacturing left in the UK to benefit from currency devaluation.

[Purple Dalek]

AtW the economics guru of CUK, has prognosticated.

Or more is it: had a pot noodle.

[Cyberman]

If BoE dropped rates big time last year when other countries held them, then there would be massive flight of capital outside of UK (pound will drop) and inflation will be imported big time - commodities peaked this year, so devaluing currency just before that would have been insane.

I doubt it would have made anything for economy either - like the falling pound now is only causing troubles - there is not much manufacturing left in the UK to benefit from currency devaluation.

The bottom line is that more people would now have much more money to spend, the economy would thus not be in such a mess, LIBOR would have dropped earlier, and thus, liquidity would not have been so bad for so long.
Dithering has made the situation worse.

The exchange rate is not just linked to interest rates. It is also linked to willingness of foreigners to invest in UK PLC, in shares, property etc. Putting us into a recession has reduced their willingness to invest here which has also knocked the pound. A quick boost to the economy could have thus boosted the pound months ago.

[expat]

Why are people of various stripes, all with vested interests to put it mildly, telling us that Scotland is damned lucky to be part of the larger UK economy or else it wouldn't have survived; and the UK is lucky not to be part of the larger Euro economy ........

[AtW]

The bottom line is that more people would now have much more money to spend

No, they would not because LIBOR would not have dropped with BoE dropping rates and inflation would soar because commodities are priced in dollars - pound only recently was £1 for $2, now it's closer to $1.5 - drop of good 25%, imagine what kind of inflation would this have caused when oil was $150 per barrel? Most of disposable income recently was eroded by energy prices, food (as consequence) etc - if anything BoE played it right to avoid dropping rates (and as the result devaluing pound) too early, at least now commodities peak is behind us so devaluation is not as bad as it would have been otherwise.

[Cyberman]

Why are people of various stripes, all with vested interests to put it mildly, telling us that Scotland is damned lucky to be part of the larger UK economy or else it wouldn't have survived; and the UK is lucky not to be part of the larger Euro economy ........

... because we can control our own interest rates !! The fact that we have used that facility far too late is down to GB, not the UK itself. If we were locked in the Euro we would be in a much worse recession because we would have been in a straightjacket, unable to determine our own future.

Scotland in the UK gets 1,000 pounds per head more in state spending than the rest of the UK. The sooner they leave, the better as far as I am concerned.

[AtW]

Scotland is damned lucky to be part of the larger UK economy or else it wouldn't have survived

Scotland would have turned into Iceland - high oil prices would have allowed speculators in HBOS and others based there to leverage it up real good and follow the route of Iceland, Scotlands currency would be devalued and people would be unable to go on holidays even to England - now that would be funny!

These days in EU independence is a mute point considering lack of visas, free trade etc - essentially independence is a higher form of devolution with more taxes left to play with, that's something all UK regions should be getting not just Scotland.

[AtW]

... because we can control our own interest rates !!

Tell that to LIBOR