A Sure Sign That Businesses Are Struggling In The Recession

Posted by Allison on 16 July 2009, 11:16

We’re all feeling the effects of the recession at the moment.  But if regular priced goods of all kinds are becoming harder to afford, there is no doubt that increasing prices are even more difficult to cope with.

But that is exactly what Ford, the car company, has had to do in recent times.  And the reason is because of the troubles the British pound has had in terms of the exchange rates.  If you have been looking at your currency converter recently you will know that we’ve had some rough times when it comes to coping with a poorly British pound.  And this has certainly had an effect on this company.  You can read more about the story on the Telegraph website.

You’ll see that this story mentions that the British pound hasn’t been doing very well when it comes to its performance against the Euro.  Now if you look up exchange rates over the last three months or so, you might wonder what all the fuss is about.  The pound has actually been doing slightly better of late.  Taking one random figure from the 5th June this year, the pound was bagging 1.1373 Euros.  And just recently on the 10th July it had increased things to 1.1655.

So where has this decision come from?  Well, to find out we need to look back further and then the story comes out.  And we need to look back quite a way too, right back into 2007.  On the 1st March that year the British pound was bagging 1.4844 Euros – quite a difference from where we are now.

It did dip back to the 1.46 region for a couple of weeks, but then it was back into the 1.47 region again.  It stayed like that until the middle of June when things got more interesting and the pound upped things to 1.4822. 

But by the middle of September the first signs of a downturn were in evidence.  Figures in the 1.42 and 1.43 region started to become more common, and it was almost as if the first signs of the recession were making themselves known.  And from the 15th November the exchange rate had gone down to 1.3988.  These were obviously the signs that Ford has been talking about, and the prices they have had to contend with over the past eighteen months or so.

And as we know, as 2007 gave way to 2008 and then into 2009, the exchange rate went steadily in favour of the Euro and the British pound lost out majorly.  We’ve lost out on nearly thirty five Euro cents in that time, which is a huge amount to have to lose out on.

So we can see now that Ford really has had a rough time of it over this period.  Perhaps we can expect prices to go up more than once before this is over, and maybe other companies will get involved as well?  Only time will tell.

It is interesting to read about how the exchange rates have such a big effect on so many things though.  And in this situation, the British pound has hurt not only a British company but the British people who might otherwise have considered buying a car.

 

Comment

  1. I have definitely noticed a few prices going up here and there. I haven’t been in the market for buying a new car although I did read online that Ford were having problems in this area.

    It’s amazing how much the recession affects us in ways we hadn’t thought of though. I never realised prices could go up in this way, but it makes sense now I have read this. I think we have been so hard at work watching those exchange rates that we never thought how far reaching they could be.

    I for one won’t be buying a new car for quite a while – regardless of government incentives!

    — Ben · Jul 28, 08:01 AM · #

  2. I wish I hadn’t read this! It’s a good article but I’m already depressed at the thought of not getting a pay rise at the mo. How long will all these price rises go on for then? First we had loads of VAT reductions and now they seem to have all dried up, and then we start reading about prices going up more than they were before.

    Oh well I guess it is just how times are at the moment. I’ve been cutting out non-essentials but you can only cut down so far can’t you? I’d hate to cut down any more!

    — Kate · Jul 28, 08:19 AM · #

  3. Price rises are always depressing. I know there has been a lot of publicity about this car incentive business for buying new cars and trading in your old one, but I agree with Ben. I’ve not got the money for a new one even with the new incentive factored in.

    The government might claim it as a success – they would anyway wouldn’t they? – but what about making it easier for more people to manage on a day to day basis? Most people can manage with the car they have, and it doesn’t seem to incentivise people to help the environment much.

    — Allison · Aug 19, 01:30 PM · #

  4. I’m writing this near the end of December and I think the year is ending on a better note than it started. I know some people with businesses have said the pre-Christmas rush took longer to get started this year than last year, but I think it caught up in the end with a last minute panic.

    I’m note sure if we are officially out of the recession or not yet anyway, but I do think 2010 will be better than 2009 was. It can’t get any worse can it? We’ll take our time improving but it will happen.

    — JamieK · Dec 21, 11:58 AM · #

  5. I think some businesses are still struggling now, even though the recession is officially over and has been for some time. I know it takes time for these things to play out and right themselves, but in reality we need to think about how long it is before businesses have real trouble to contend with.

    I know people who managed to sail through the early part of the recession, and they are only now starting to really feel the pinch. In fact the tipping point for them was when the recession was announced as being over! I’m not sure how that works but I know it was hard for them to start struggling just after they had breathed a sigh of relief that it was over with.

    — Kate · Apr 27, 07:55 PM · #