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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

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

The U.S. economy as one to watch

I’m in the United States at the moment, and the news here is of an economy that is still unstable. A recent report shows that not only are employers still cutting jobs, but that the number of jobs lost in June was more than were lost in May. Despite this, Barack Obama is confident that things are stabilising.

Why is the US economy important to us in the UK? The United States has the largest economy in the world and affects the economies of most of the rest of the world, including the UK. There are a range of ways economies affect one another – for example, if the US suffers from a poor economy there will be less demand in the US for British goods and services, as money is tight. Also, our financial institutions work very closely with those in the US – the bad debt created with the sub-prime loans in the US affected banks worldwide, and our own banks had been making sub-prime loans of their own.

It will be possible for the UK economy to recover before that of the USA – and in fact it might happen that way – UK industry does not seem to be suffering as badly as in the US, and we have a smaller economy to turn around. However, it is most likely that the global recovery will begin only once the US itself is in recovery – and the news over here suggests that’s some way off, at least for the moment.

Tags: banks, Economy, recession, recovery, unemployment, us