abcde_98

Weak British Pound Could Boost U.K. Economy

Everyone, let's
1. stay on topic ... i'd like to think Seekingalpha's msg forums are better than weeding through many spam--ish and negative/zero-'added'-... posts on Yahoo
2. have (somewhat) balanced commentary... try to see the positive and negative side of authors' comments. I'm not perfect at this especially with ECB's rather weak (imo) rationale to not reduce rates

Criticism is good, no offence taken, appreciate feedback as it can present other considerations for analysis

Weak British Pound Could Boost U.K. Economy

Nice segmentation of some considerations. Two cross-border items:

1. Europeans flocking to holiday in UK. Agree there will be an increase, but not so "sky high" due to : 1) UK land / features 2) UK climate/seasons 3) European customs. "Holidays" may be short trips. Can you see Europeans spend their holiday month of August switch from the culinary delights and beach/sun coasts of Spain/France/Italy/Gre... to deep fried Mars bars, beaches in the Lake District of England, or concrete architecture of Manchester, for an entire month?

2. UK residents vacationing and owning homes/condos in Euro-zone areas such as Spain/France. Firstly, vacations would be very expensive with GBP-EUR at par, so expect a reduction. Secondly, and perhaps much bigger: UK residents with mortgages on Euro-zone homes/condos they bought in the past few years ... the mortgage amount and payments would be in Euro's, but the GBP has declined 50%+, to make those mortgage payments will cost the UK citizen say 25-50% more of their 'spare" cash. I doubt very few individuals put a hedge on the GBP-EUR rate. Furthermore, there could be negative equity in some properties since house/condo prices have been falling in some areas, and perhaps will fall beyond the mortgage amount. What will these UK owners do in such situation? It's likely that many have done nothing so far since, the exchange rate decline was initially gradual and then accelerated with perhaps people thinking rates may "revert to the mean", and then there is the emotional / lifestyle aspect which is hard to give up. How significant is this ownership (eg. number or % of Britons)? What is the approx average magnitude per property? I've got to think this will have meaningful, direct and indirect, effect on Euro-zone economies.