Could Britain drop the pound?
The British pound was trampling the dollar last year, but lately its value is rapidly decreasing. Now a debate is stirring over whether to lose the pound sterling and adopt the euro. Christopher Werth reports.
A British pound atop a U.S. dollar (Christopher Furlong/Getty Images)
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Scott Jagow: Remember about a year ago, the British pound was crushing the dollar? It was setting a new record every day, at more than 2-to-1. Those days are long gone. The pound isn't even $1.50 this morning. Its drop has some Brits considering the unthinkable. Christopher Werth reports from London.
Christopher Werth: The story of a declining currency is all about winners and losers. Edin Basic co-owns Firezza, a chain of gourmet pizza restaurants in London. Their selling point is top quality ingredients imported from Italy.
Edin Basic: This is pancetta, Italian pancetta from Italy, there's radicchio, now fiore del latte mozzarella . . .
That last one, mozzarella, is very important.
Basic: We cannot find it in this country -- it's called fiore del latte, which is like "flower of the milk."
Firezza imports a ton of mozzarella every week, and he pays for it in euros. But Firezza's customers pay him in British pounds. As the pound has dropped in value against the euro, Basic's cheese bill has gotten a lot bigger. That makes him a loser. The pound has also fallen against the dollar. And I get paid in dollars.
Werth: If I could just have one cup of coffee please.
That makes me a winner.
Clerk: One seventy-five.
Werth: Thanks.
My $4 cup of coffee just went to about $3. And all the pressure on the pound has a sparked a debate over something that hasn't been so much as whispered about in Britain in over a decade: giving up the pound sterling and -- OK quiet now -- adopting the euro.
Roland Rudd: It's really an emotional issue for a lot of people in Britain.
Roland Rudd is the chairman of Business for New Europe:
Rudd: But ultimately, as with everything, it comes down to economics.
He says converting to the euro could unify Europe's response to the financial crisis. The European Central Bank, and not the Bank of England, would control the U.K.'s monetary policy.
Rudd: A number of people see the loss of sterling would equate to a loss of sovereignty.
Hugo Robinson is at the think tank Open Europe:
Hugo Robinson: A weakening of the pound sterling is no bad thing.
That's because British exports go up when the pound goes down. The debate will go on, but the pound would probably have to collapse to get the Brits to give up their sterling.
In London, I'm Christopher Werth for Marketplace.
Comments
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From San Francisco, CA, 12/11/2008
Economically speaking, the old saying of "no man is an island", can certainly be applied to the Britain/p(precious) sterling vs euro case. The sense of loss of sovereignty has been felt by every nation adopting the euro, yet they are all doing fine, (global economic crisis aside) thank you. The whole issue is like..., well like going to the dentist, no pleasant but necessary. The benefit, we can all smile again unashamed, not to mention be able ton chew our food.... Cheers, Juan
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