Author: Ben Debski

We seem to have entered a parallel world where the unusual has become the norm. Before Northern Rock’s nationalisation and the demise of Lehman Brothers, exchange rates changed but the movement tended to be predictable and slow to happen.

Nowadays exchange rates can move two or three cents in the matter of two or three hours. But having said that what I have found interesting over the last two years is that although movement in the euro/pound exchange rate has been volatile the range in which it has moved has been fairly limited.

When queues stood outside Northern Rocks branches it was fairly clear that sterling was going to move one way and that was downwards. In the following years it lost 25 percent plus against most currencies and even more against other currencies such as the Australian dollar where the commodity based economy enjoyed higher yields and better economic conditions.

Now that we are seeing rioting in the streets of Greece and the possibility of the eurozone being split up it seems strange that the euro hasn’t been weaker. Against sterling it has stayed in limited range of €1.10/£1 to €1.20/£1 over the last twelve months. I must admit I find it difficult to find any cogent explanation especially when you look at the depth of the debt problems for both euro zone governments and their banks.

The recent meeting of the euro zone prime ministers agreed that the eurozone banks needed another €100bn in equity and that the European Central Bank needed another €600 billion in fire power to help the debt laden euro zone governments fund their debts in the short term. And these figures are viewed as being on the low side by international investors who would have no problem in doubling these additional amounts.
So why hasn’t the euro plunged against all other currencies? I think there are two reasons. Firstly, the euro zone in totality has a balance of payments surplus. The reason for this is Germany who is the world’s second largest exporter after China. This puts the euro zone in a much stronger position than say the UK or the USA who both have significant balance of payment deficits. The other is that these two economies have not been in the best of health themselves and the recent upheaval in the euro zone has been detrimental to their economic recoveries.
And I don’t see this position changing any time soon. Detailed discussion of the woes of the UK economy have not been front page news for the last two months, but they are still there. UK government expenditure is still too high. I do wonder how much expenditure has actually been cut. And we can see from Italy and Greece the dangers of not doing this properly and quickly.
Ireland sits at the other end of the spectrum having attacked its government costs quickly and by significant amounts at the start of the financial meltdown. Although not out of the woods, at least they know they have given themselves the best chance of benefiting from better days when they finally return.
The commodity backed currencies are in an interesting position as they are so dependent on China and its – to date – insatiable need for commodities. Their great fear is that if this comes to an end it will be a major source of pain as their economies have grown on the back of Chinese demand. How likely is this? It is very difficult to assess as there will be extreme political pressure on the Chinese government to keep their economy growing, albeit not at the breakneck rates of recent years.
The US dollar has had mixed fortunes. Their economy is in a bad state with unemployment staying stubbornly high and close to the 10 million level. However, the dollar does have the benefit of being viewed as a safe haven asset and as such as risk aversion increases, the dollar strengthens. But interest rates will be kept at their very low levels for quite a while yet. In fact, I don’t expect them to increase rates until 2013 at the very earliest.
And interest rates are likely to be held, or even lowered elsewhere in an effort to encourage growth and avoid a double dip recession. Australia and the euro zone have both had interest rate cuts in the last quarter of 2011.
So where to next for sterling? I don’t see much upside against the US dollar, even with its extensive economic problems. It is still the world’s largest economy – but the USA does have to reduce government expenditure and increase tax. Against the euro, my best bet would be more of the same, but with a greater likelihood of sterling strengthening and perhaps consolidating around the €1.25/£1. But, as ever, I could be very wrong if the euro zone finds a long term solution to its debt problems, or alternatively breaks asunder.  n

Charles Purdy is Managing Director of Smart Currency Exchange www.SmartCurrencyBusiness.com or call +44 207 898 0500

Nowadays we are bombarded with information about climate change. The recent freakish and somewhat out of season flash floods in and around Asia and the snowstorm on the Eastern Seaboard made me reflect on a conference I attended on the East Coast of America. As the conference was during the month of October I decided to tag a couple of days onto the end of the trip to visit Vermont for a few days “leaf peeping”.

If you have not heard of “leaf peeping” it is an Americanism for staring or “peeping” at leaves. In October the tree leaves turn the most amazing colours of brown, bronze, orange and yellow. Many visitors walk through leafy glades and stare in amazement at the beautiful sight as the trees lose their verdant summer colours and prepare for the winter.

One of the amazing sensations can be to walk through an avenue of trees when the wind blows. Suddenly, there is a great rustling sound as the trees shed their leaves and swirl to the ground and you can find yourself enveloped in one of nature’s real autumnal blankets.

This October I stared in disbelief at the weather report as the television presenter advised that the Eastern Seaboard had received an unusually early fall of snow which forced the airports to close. Despite the fact that the Eastern Seaboard can experience severe winters October seemed somewhat early.

The news report made me wonder how it would have felt to end a conference in October in fairly temperate conditions. Afterwards, to visit Vermont and wander through forests of autumnal leaves hearing the crunch of dry leaves underfoot rapidly to be exchanged for the silence underfoot that a snowfall evokes. Before you know it there is 10cm of snow underfoot and you find yourself wandering straight into a blizzard.

Apart from the initial shock of the snowfall there is the inconvenience of road and airport closures. The threat of airport closures is always a nuisance, especially to business travellers working under tight time constraints.

My recommendation is that all fellow business travellers should follow Robert Baden Powell’s motto adopted by the Scout movement and that is whatever or wherever the meeting is absolutely “be prepared” and bullet proof your suitcase and fill it with items ready for any eventuality.

Apart from packing the usual conference suit and business attire perhaps we should begin to tuck a fleece, wellies or even a set of skis into the suitcase and also take an umbrella. You never quite know where or when the snow could fall at his time of the year. However, the idea of extra items could be somewhat cumbersome for the business traveller already loaded with laptops and files from a conference or business meeting.

Attending a conference in the Southern Hemisphere can be a rewarding and interesting experience. Normally, one would only pack lightweight suits and linen shirts for the cool, pleasant climates. However, again this autumn towns and cities have been engulfed by freakish out of season winds and high volumes of rain. Perhaps everyone should join their local rowing club and have some lessons so they can carry on meetings whilst rowing along a river or flood plain.

Despite the news reports about global changes in the weather I would recommend that we all “keep calm and carry on” … to the airport and to the conference.

Presenter and travel writer Jayne Watkins has had over 30 years travel industry experience which includes retail, airline and sales

You might be forgiven for thinking that winter 2011-12 across Europe and the US was destined to be freezing cold with snow up to our eyeballs! At least that is if you believe the popular press or eavesdrop on some of the more fearful predictions out there in cyberspace.

Well, it’s perhaps just as well that we start from that premise because that will mean that we are all slightly more prepared than would otherwise be the case.   You see, preparation is at least half the battle because to be forewarned is to be forearmed and to be forearmed means individuals, companies, institutions and governments may get off their collective bottoms and do something before a big winter event hits us again.

Take yourself back to the end of October and the unscripted snowfalls that hit NE USA.  More than a dozen deaths, transport crippled and commercial activities seriously affected.

Now I would not suggest that was an easy one to forecast, but those who caught the warnings and acted upon them before the white stuff struck, saved themselves a lot of grief by doing something; but sadly most didn’t. Further back still and the serious and prolonged winter weather for Europe, the US and Japan last year also caught many by surprise and cost several billion in whatever denomination.

So even before we entertain the risk of severe winter weather this time around, what should we be doing in order to best equip ourselves from a business perspective?   Here’s our seven-point guide:
1.  Appoint an in-house severe weather coordinator. The job of this person is to ensure all posts are covered, that staff are informed and that adequate contingencies are in place for both safety and commercial advantage.
2.  Keep updated about winter prospects. Subscribe to a reputable weather service that keeps you updated on the longer term prospects.
3.  Subscribe to a reliable form of short to medium weather alert.  Preferably despatched direct to key personnel.  Occasionally you may get a crying wolf, but better that than to rely upon the media to shout out just as it happens!
4.  Arrange in advance car sharing for staff with those that have 4×4 vehicles. At that very least, ensure staff carry in their vehicles shovels, sleeping bags, food and drink, a mobile phone, first aid, warm clothes, torch and a whistle.
5.  Be prepared to be flexible in working practices. Equip staff to work from home. If possible, diversify your product/service; catch the moment as the weather turns – especially if you run a business that prospers in wintry weather.
6.  Have a store of useful items that always run out when the masses discover winter has landed, such as grit/salt, shovels, fuel for vehicles and heating, candles, torches, battery operated radios, emergency food & water and additional bedding.
7.  Insure.  If you fear the worst it is possible to insure the worst.  But hurry, underwriters won’t cover you as the first flakes fall!

All that having been said, what does winter 2011/12 hold for us? Well, the South American phenomena La Niña remains active (as it was last year) so that may not bode well.  On the other hand, at the time of writing there was no sign of obvious atmospheric blocking patterns forcing an early start to winter, and other factors suggest mild for most – at least for a time. The truth is we have some very good but commercially sensitive ideas of how the winter is going to unfold on both sides of the Atlantic, but for now it’s head or tails and plan for the worse!

Jim N R Dale is a Senior Risk Meteorologist for British Weather Services

As I sat hungry aboard my long haul economy flight to South Africa I waited for my in-flight meal with baited breath.  Awaiting our lunch I began thinking who else was attending this dinner party at 35,000 feet?  To my left a teenage girl interested in little more than perforating her ear drums, and my right an elderly man concentrating on inspecting the inside of his eyelids. I realised immediately this may be a lonely TV dinner for one. I was reminded of the question, “who would you invite to a dinner party if you had the chance?”

I then got to thinking who I would have as a travel companion given the opportunity. Perhaps I would see Memphis through the eyes of Elvis, accompany Grace Kelly to a premier in Monaco or forget all of that completely and invite a Michelin Star Chef to assist the cabin crew in the galley right now.

Eventually the stewardess graciously made her way down the aisle asking that all important question, “chicken or Beef” and dutifully attending to the herbivores along the way, some of whom were slightly disgruntled at the lack of difference between vegan and vegetarian meals.

Tucking into my obligatory bread roll I couldn’t help but think how pleasant the tray looked, but at the same time wondered how in keeping were the portion sizes with the rest of the world.  It wasn’t too many years ago that we became faced with the supersize culture, that rapidly spread throughout fast food outlets but seemingly didn’t make its way skyward. Fast food comes in size options and that alone may be a beneficial influence on in-flight meals. It is true that chains have found their way to the strangest places, just last year I was at the foot of the Pyramids in Cairo ready to fully submerge myself in the hieroglyphics of the ancient Egyptians, only to be faced with the latest bargain bucket deal.

I am certainly not encouraging fast food chains onto airlines but an option to supersize perhaps.

Faced with my meal I began thinking that fast food may be a better option for the simple fact that I would not have to tackle my personal gripe of plastic cutlery. I understand the reasoning behind its use on planes but nothing is more awkward than sawing your way through a breast of chicken with an implement no sharper than a baby spoon, whilst tucked into a space no larger than a sheep pen. I began to tuck into my food at pace in the hope that my elbows would behave themselves and not disturb The Kings of Leon concert to my left and Sleeping Beauty to my right. Supersize may not relate solely to food. As someone close to 6ft, a little extra space between rows to enjoy my meal would be no bad thing either.

If you are indulging in business class food and service then the trivial matter of plastic knives and forks may not be that relevant. Food service however is a topic close to all our hearts as highlighted in recent years by celebrity chef Jamie Oliver, who vastly improved the quality of school dinners. Perhaps it is time to shine the spotlight on economy airline meals and give them a celebrity makeover. If this were the case I would certainly know who to invite as a table companion for my next airline appetiser.