Has the pound turned the corner against the Euro?

As the Italian <em>tuttishambles</em> starts to bite, the currency wars get interesting.

Yesterday saw morning saw a mild spike in the EUR/GBP exchange rate, peaking at £0.8807 to the euro before the results of the Italian election started to become clear and the Euro collapsed:


The spike was widely attributed to the Moody's downgrade, and, insofar as any single cause can be found, it probably was. But it was reported very differently depending on how important the downgrade was felt to be. For instance, whereas I wrote that the pound was "only slightly down against the Euro", others framed the same information as "a new 52-week low".

Both are, of course, true. The pound hit its peak against the Euro last July and has been steadily declining ever since:


Even after improving against the Euro on the back of the news from Italy, you would still have to go back over a year to find the last time before 2013 when the EUR/GBP was so high:

So when we say "the pound hit a 52 week low" after the Moody's downgrade, it's technically correct, but only gets the truth across if you bear in mind that the pound also hit a 52 week low before the Moody's downgrade.

In part, that continued collapse is to do with matters beyond the control of British policy. Until recently, the currency was a safe haven, isolated from the contusions of the eurozone and the US fiscal cliff. That boosted it higher than its resting level, and as the fiscal cliff was sorted and the dust cleared revealing a eurozone still standing.

But it's also an artefact of the growing evidence that the Bank of England is prepared to put up with significantly higher inflation than normal, as well as the perennial driver of all Britain's economic fortunes, our anaemic growth.

In a way, despite the focus on Japan's increasingly aggressive attempts to drive down the yen, it's us who are actually winning the currency wars. The problem is that we aren't getting a huge amount for our victory. Despite what theory says ought to happen, Britain's exports remain flat, and our homegrown industry isn't seeing any benefit either. Meanwhile, the cost of living for Brits soars correspondingly.

It you're looking for the upside of the Italian tuttishambles, then, it's that: your imported truffles and holidays to the French Riviera will finally start to come back down in price.

What do you mean you don't import truffles?

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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Britain's shrinking democracy

10 million people - more than voted for Labour in May - will be excluded from the new electoral roll.

Despite all the warnings the government is determined to press ahead with its decision to close the existing electoral roll on December 1. This red letter day in British politics is no cause for celebration. As the Smith Institute’s latest report on the switch to the new system of voter registration shows, we are about to dramatically shrink our democracy.  As many as 10 million people are likely to vanish from the electoral register for ever – equal to 20 per cent of the total electorate and greater than Labour’s entire vote in the 2015 general election. 

Anyone who has not transferred over to the new individual electoral registration system by next Tuesday will be “dropped off” the register. The independent Electoral Commission, mindful of how the loss of voters will play out in forthcoming elections, say they need at least another year to ensure the new accuracy and completeness of the registers.

Nearly half a million voters (mostly the young and those in private rented homes) will disappear from the London register. According to a recent HeraldScotland survey around 100,000 residents in Glasgow may also be left off the new system. The picture is likely to be much the same in other cities, especially in places where there’s greater mobility and concentrations of students.

These depleted registers across the UK will impact more on marginal Labour seats, especially  where turnout is already low. Conversely, they will benefit Tories in future local, Euro and general elections. As the Smith Institute report observers, Conservative voters tend to be older, home owners and less transient – and therefore more likely to appear on the electoral register.

The government continues to ignore the prospect of skewed election results owing to an incomplete electoral registers. The attitude of some Tory MPs hardly helping. For example, Eleanor Laing MP (the former shadow minister for justice) told the BBC that “if a young person cannot organize the filling in of a form that registers them to vote, they don’t deserve the right to vote”.  Leaving aside such glib remarks, what we do know is the new registers will tend to favour MPs whose support is found in more affluent rural and semi-rural areas which have stable populations.  

Even more worrying, the forthcoming changes to MPs constituencies (under the Boundary Review) will be based on the new electoral register. The new parliamentary constituencies will be based not on the voting population, but on an inaccurate and incomplete register. As Institute’s report argues, these changes are likely to unjustly benefit UKIP and the Conservative party.

That’s not to say that the voter registration system doesn’t need reforming.  It clearly does. Indeed, every evidence-based analysis of electoral registers over the last 20 years shows that both accuracy and completeness are declining – the two features of any electoral register that make it credible or not. But, the job must be done properly.  Casually leaving 10m voters off the electoral resister hardly suggests every effort has been made.

The legitimacy of our democratic system rests on ensuring that everyone can exercise their right to vote. This is a task which shouldn’t brook complacency or compromise.  We should be aiming for maximum voter registration, not settling for a system where one in five drop off the register.