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Pound’s Euro rate improves

With the economy having improved over the last couple of months, and many people last year choosing to have a cheaper holiday and stay in the UK, perhaps this year there’ll be more of us thinking of treating ourselves to a trip to Europe this summer. And if you’re one of them, good news – over the last few weeks the Euro exchange rate has improved significantly!

Although €1.20 to the pound is not what you might consider a great rate, it’s not been at that level since the pound plummetted at the end of 2008. Unfortunately, it’s not all good news – this improvement is not due to the pound getting stronger but the Euro getting weaker – the pound continues to fall against the Yen and the Dollar (although it has seen a recent rally on this last count). The BBC’s Gavin Hewitt has written a great blog post explaining why the Euro is in such trouble.

When will the pound return to its previous strong position? Well, the rates we remember of a few years ago such as 2 dollars to the pound are not going to return anytime soon, but if confidence in the UK economy increases then investors will value the pound more. An increase in UK interest rates would also give a boost (since saving pounds then becomes more worthwhile) – but this would impact on mortgage interest rates for a lot of homeowners. Would you rather find it easier to pay your mortgage every month, or have a bit extra holiday money in the summer?

Tags: dollar, economics, Economy, euro, Foreign Currency, foreign exchange rates, holiday, holiday money, pound, united states, us, yen

Superfreakonomics

I’ve previously mentioned the book Freakonomics as an interesting read which explains how economic thought can be applied to many different (and unusual) areas of the world around us. Well, the same authors (Steven D. Levitt and Stephen J. Dubner) have recently released a follow-up book, Superfreakonomics.

This book covers in quite some depth topics such as finding solutions to global warming, using statistical analysis to find terrorists (particularly relevant at the moment) and why the solutions to big problems are often simple. I personally found that a few of these chapters strayed further from the economics-based descriptions that defined the first book – concentrating more on the details of possible solutions to global warming than the economic forces working on those solutions, for example.

Having said that, the chapter about the economics of prostitution is very much like the previous book’s chapter on drug dealing – because the relevant studies the authors were reporting on were done by the same researcher. It offers some of the detailed analysis that I felt made the first book accessible – explaining why the data gathered (and the methods used to gather the data) can tell you things you wouldn’t otherwise find out.

A very entertaining read which unfortunately is over too quickly – but the epilogue is my favourite part of the whole book, where they explain briefly the impact of explaining to monkeys the concept of money!

Click on the link to the right to buy the book from Amazon, and you’ll be doing your bit to support this site!

Tags: books, economics, Economy, united states

Healthcare in the USA

Another thing that is being mentioned a lot in the news in the States at the moment is universal healthcare. They don’t have an equivalent of the NHS that we have in the UK, to get healthcare in the US you need to have health insurance. Just as with car insurance or travel insurance, the more you pay the better coverage you get – the cheaper insurance policies will have high excesses (the amount you have to pay in the event of a claim) and may not cover all treatments.

The cost of insurance has been going up in recent years, and more and more Americans can’t afford to have any insurance at all. Small businesses are also finding it difficult to provide healthcare for their employees, as they can’t negotiate big discounts with healthcare providers. The number of Americans without insurance has been increasing, and although hard numbers are difficult to find (different organisations count the uninsured in different ways), this study claims that it could be as many as one in three are uninsured.

President Obama is pushing for healthcare reform which would cover all Americans with a government-run system, the cost of which is estimated at $611 billion. That’s a lot of money, and it could hit American taxpayers for years to come. However, it may end up costing them less than the private insurance route – as this Wikipedia article says, more is spent per person for healthcare in the US than in any other country – a centralised approach may be more efficient.

What relevance does this have for us in the UK? I believe that healthcare reform could help improve the US economy, and as I said in my last post, that will help bring the world out of recession. Why do I think this? Small businesses in the US are struggling in the current economic climate – they are having to cut healthcare benefits for their employees, or face increasing costs. Citizens with insurance spend less time being ill (as they get better treatment, or indeed any treatment, and also can take preventative measures like regular check-ups) and therefore take less time off work and are therefore more productive. With the burden of providing healthcare for employees lifted, small businesses and family-run businesses should be able to weather the storm of the global recession, and turn a profit sooner.

This is all assuming that the cost of medical insurance as it is currently is higher than the increased taxes that will be required for government healthcare to be provided. This is by no means certain, and of course, health insurance is optional but taxes are not!

Tags: dollar, Economy, healthcare reform, recession, recovery, united states, us