Posted by Allison on 11 June 2009, 11:08
It’s an interesting question, isn’t it? But to speculate on an answer we should look at how things are positioned at the moment.
Prime Minister Gordon Brown was never voted into government in the first place. He took over from Tony Blair when he gave up the post. This means that Brown is unelected – a fact that many people feel cheated about. If he was doing a great job and people liked him then it probably wouldn’t matter. We could overlook it. But as we all know, the majority of the country is very dissatisfied – to put it mildly – about his performance.
There is really no individual aspect of his tenure as Prime Minister that you can look at and say he did a good job on. But the question we have here is whether his continued position as Prime Minister is actually damaging the pound on both the short and the long term.
Let’s consider this carefully. Could one person really damage a currency in such a way? He obviously doesn’t mean to cause any damage like this – he wants the UK economy to get back on its feet as soon as possible, just like everyone else. But he doesn’t seem to have the ideas, the determination or the skills to be able to do that.
The first week in June was not a good week for the Prime Minister though – and that was keenly reflected in the exchange rates you would have seen on your currency converter. The pound fell dismally against the Euro and the US dollar, not to mention other currencies as well. And a lot of it seemed to be connected to the fact that ministers had walked out on their jobs and on the Prime Minister, and he was trying vainly to keep things together.
It makes sense when you think about it. How inspired would you be to invest in our currency when our government can’t seem to keep itself together?
A typical example of the kind of news stories that have been hitting the headlines of late is this one from the Bloomberg website. It illustrates exactly what has been going on, and it does make you wonder whether a stronger government would result in a better performance from the pound. We’re not talking about miracles here of course, but it would make a difference.
We have even struggled against currencies you don’t normally see reported on that often. Take the Indian rupee for example. On the 1st June the pound was taking 76.9539, and that climbed to 77.3549 the next day and even higher to 77.6380 the day after that.
But as the resignations and drama unfolded, it soon started falling. By the end of that week, all the pound could manage to bag was 75.8674. That is quite a drop in reality, and it makes you wonder how much longer these kinds of results will happen while the present PM is still in power.
An election is looking more and more likely for next May though; the Prime Minister clearly doesn’t want to give up and he doesn’t want to call an election before then. That’s because he knows he would be dropped if he did.
But will his determination to hang on damage the pound even more?