Friday, 26 February 2010

Sterling crisis?

I need to make it clear that I'm not an economist, a currency trader or anything else to do with money (apart from being a user that is), but I've been hearing lots of talk about a sterling crisis.

This morning's BBC news put the political and economic uncertainty together as causes of a potential uber weakening of the £. According to the BBC report, some are predicting £/$ parity and that €1 will be worth more than £1.

If that ever happens (and a friend of mine has been predicting parity with the US dollar for quite a while) it's bound to make GA more expensive. Oil is priced in dollars, and so is almost anything else in aviation from avionics to engines, to parts. The bits that aren't priced in dollars are priced in euro (Rotax for example), so that doesn't help either.

With a bit of luck the 'experts' have been exaggerating the situation for dramatic effect and screen time, but thoughts of returning to a £1/$2 exchange rate seem premature.

Here's a more eloquent version of the above from the Daily Telegraph

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