Can I buy Euros to avoid savings erosion when the Brexit hits the fan next week?

Sapphire

itsthenoise10 wrote: »

I know that some of the loss of the pound has already happened. But, is it possible for a UK citizen to change their cash savings into Euros to avoid the losses that a Pound fall next week will inevitably bring; when May's bill is very likely put out of its misery next week in Parliament?

Why don't you just do it, then see what happens and how you will benefit? Just take a punt and have an adventure.

talexuser

You'll be very lucky to make real money buying and then selling Euros at retail prices. But a few Economists think Britain can never pay off the national debt at current growth levels (or get it to manageable levels compared with public expectation of spending needs), let alone after Brexit, so the long term policy will be the classic way of a country reducing debt, inflation and a weaker currency.

short_butt_sweet

this is going off-topic, but never mind ...

talexuser wrote: »

a few Economists think Britain can never pay off the national debt at current growth levels

why would britain try to pay off the national debt. the national debt is also the national savings. do you want households and pension funds to have no savings?

(or get it to manageable levels compared with public expectation of spending needs)

the level of national savings/debt has got nothing to do with that. we have choices to make about how we allocate real resources, regardless of savings/debt level. savings/debt is a way of accounting that 1 person/entity owes something to another; which has its uses, but doesn't add anything to, or anything subtract from, overall wealth, because for every credit to 1 person, there is an equal debit to another.

Simon_Brown_2

short_butt_sweet wrote: »

this is going off-topic, but never mind ...

why would britain try to pay off the national debt. the national debt is also the national savings. do you want households and pension funds to have no savings?

the level of national savings/debt has got nothing to do with that. we have choices to make about how we allocate real resources, regardless of savings/debt level. savings/debt is a way of accounting that 1 person/entity owes something to another; which has its uses, but doesn't add anything to, or anything subtract from, overall wealth, because for every credit to 1 person, there is an equal debit to another.

So what about those countries that are not in debt?
Creditor nations?

Simon_Brown_2

talexuser wrote: »

You'll be very lucky to make real money buying and then selling Euros at retail prices. But a few Economists think Britain can never pay off the national debt at current growth levels (or get it to manageable levels compared with public expectation of spending needs), let alone after Brexit, so the long term policy will be the classic way of a country reducing debt, inflation and a weaker currency.

I don't think there's any need to use the future tense.
Inflation via currency devaluation is UK govt policy.
That's why we have interest rates so low.

Just look at the GBP to USD rate over the past 200 years....

Simon_Brown_2

Economic wrote: »

Either you have a lot of inside information about government policy or you believe every daft conspiracy theory. I suspect that it is the latter.

So why hasn't the UK govt raised interest rates to strengthen the pound?
They did it on Black Wednesday - trying to keep the pound in the ERM.

PS I know the BoE is ''independent'' of govt - but that is a recent choice anyway. The govt could change it if they wanted to.

Fact is, CPI / RPI is rigged by govt to show falsely low inflation figures. Because they want to keep pensions etc low.

I've never seen any politicians on TV boasting about how weak the pound is against the USD. If pushed, they'll mumble something about it being good for our exporters, but in truth the govt uses inflation as a stealth tax.

short_butt_sweet

Simon_Brown wrote: »

So what about those countries that are not in debt?
Creditor nations?

what exactly is your question?

is it: could the UK become like them? no, not by any sensible route that i know of. e.g. norway have huge oil fields, compared to a small population. we just aren't in that situation.

but why would we want to become like them (no offence intended to norway )? the UK's national debt isn't a problem, it's useful. it's the other side of the coin of the national savings.

Plus

MataNui wrote: »

You will be paying retail spread which is so many times greater than the spread on the underlying markets you are absolutely 100% guaranteed to lose on both ends of the transaction (unless you believe GBP will drop to cents which all the evidence so far would suggest wont happen).

Retail spread is about 0.5% each way, if you use low-fee brokers (Transferwise, CurrencyFair, etc). Which is not a million miles away from the cost of buying equities (stamp duty or management fees). There is also the option of buying unhedged bonds, eg US Treasuries which could have lower transaction costs at the expense of annual fees.

Here's an example of a hedging strategy where this might make sense. You want to buy a property in central London. London is a global market, so overseas investors are your competition. If the pound tanks, their dollars are worth more, meaning they might be willing to pay more (but only might, given other factors that might weigh on the market). Then certain parts of London might see property price inflation in pound terms, which someone whose cash is in sterling can't compete with. Therefore hedging to dollars might mean your investment is more aligned with that of your potential competition.

All a bit hypothetical - and risky - but an example where hedging could be part of a savings strategy.

short_butt_sweet

Simon_Brown wrote: »

So why hasn't the UK govt raised interest rates to strengthen the pound?
They did it on Black Wednesday - trying to keep the pound in the ERM.

good example: they tried and it failed. you can't defend the pound at an unsustainable level just by raising interest rates. what often makes an exchange rate unsustainable is a high trade deficit; devaluation is a way of reducing the trade deficit, whether by reducing imports (which not everybody can afford after devaluation) or increasing exports (which do become more competitive).

PS I know the BoE is ''independent'' of govt - but that is a recent choice anyway. The govt could change it if they wanted to.

that's perfectly correct.

Fact is, CPI / RPI is rigged by govt to show falsely low inflation figures. Because they want to keep pensions etc low.

CPI/RPI are not rigged. that is just silly. the purpose of CPI was to have a measure which is more comparable to inflation measures in other countries.

switching pensions, and other benefits, from being linked to RPI to CPI, is motivated by wanting to reduce them (or increase them by less). but that doesn't invalidate the existence of either RPI and CPI. arguably, it's a misuse of CPI, which was intended for a different purpose.

dividendhero

itsthenoise10 wrote: »

And thanks to all the Brexit cult loons for your replies, make sure you're upstanding, clutching your blue passports and singing 'Rule Britannia' as you go plummeting over the cliff!

Think brown would be a more appropriate colour for those new passports