To worry about our currency?

[12Thorns]

With our inflation apparently so much worse than anyone else, Aibu to fear for sterling?

what if it’s not all about petrol and food and gas and everything going up in price, but rather trust in our currency going down?

what if the worldwide shortages are more trivial, but hiding a bigger problem here, since Brexit?

I’ve been in a country when the currency collapsed, and it wasn’t an experience I ever want to repeat

the lead in went pretty much like this though

On the whole YANBU, GBP is in decline and has been for years now. A lot of the more recent decline is due to Brexit. However, I don’t think the currency will collapse as we are not seeing signs of hyperinflation nor is our inflation that much worse than the rest of Europe, US, Australia, and so on.

Good. That’s reassuring thank you

The pound was worth €1.14 five years ago, it’s worth €1.17 now.

So? You do realise the Euro is also a currency and its value fluctuates too? You can’t compare currency A to currency B to determine if the currency A has declined in real value globally.

This is why there are indexes that you compare currencies to in order to calculate whether it is stronger or weaker on the global marketplace. For example, here is an infographic of the GBP from 2005 - 2019 against the Bloomberg Pound Index.

The Bloomberg Pound Index (POUND) tracks the performance of the British Pound versus a basket of leading global currencies. The Index represents both developed and emerging market currencies that have the highest liquidity in the currency markets and the biggest trade flows with the U.K. It has a dynamically updated composition and represents a diverse set of currencies that are important from trade and liquidity perspectives. It provides a better measure of the British Pound compared to other indices that do not update their composition and is comprised of a handful of currencies with concentrated weights.

There are other indexes you can choose from, of course. But the results don’t vary much. They all show a general decline.

Hmmm. The currency I witnessed a spectacular crash of, also hadn’t visibly fallen against the dollar before hand ….

Thanks. Slightly less reassuring

On that index it’s also above where it was in 2016. To try to paint the recent years as a decline is simply false.

You seem to be tying yourself in knots here to make a point that isn’t true.

There are a lot of currencies to worry about before you get to sterling. Seriously.

Which other countries are getting worse inflation?

Most other countries are in a similar position

Its verified real data so the decline you see on that chart cannot be “false”. I think the issue may be that you have a very short time scale in mind when you think of “recent”. To me 2005-2019 are recent years when thinking about currency declines and the impact of inflation. It’s within the last twenty years, and regarding a currency that has been around for centuries.

Didn’t we almost reach parity a few years ago? So yes it’s stronger now

op it is one concern that will drive decisions, plus inflation

Listening to a very good economist earlier I’m trying to understand and get insights as I find it interesting

It is complex though and even economists don’t always agree

So? You do realise the Euro is also a currency and its value fluctuates too? You can’t compare currency A to currency B to determine if the currency A has declined in real value globally.

This link appears to show that the value of the pound has not changed significantly against a basket of currencies since the 2008 crash. (Though at that point it did apparently fall significantly from the level it had been hovering at for the previous 15 years.)

www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/bk67/mret

@Getoff
Followed your link. Yes, it’s clear that the pound dropped approx. 25% in the 2008 crash, was mostly recovered in 2015 but then during the lead up to the Brexit vote and immediately post vote (2015-16), it crashed back down again and has since been trading at approx. 25% below the 2007 level.

Lots of evidence suggests that the pound would have continued its post 2008 recovery if it were not for Brexit.