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Unpredictable Pound Sterling threatens NBS investment in UK
– Chartered Accountant Christopher Ram
“It cannot be considered acceptable for a decision of the members to be openly flouted by the directors,”
This is according to Christopher Ram, one of the ‘Concerned Members’ of New Building Society (NBS) as it relates to that entity’s investment in the United Kingdom and the current downward slide of the Pound Sterling’s value.
Chartered Accountant Christopher Ram
Ram in an invited comment said that at the last members meeting of the NBS, the Directors gave the assurance that the Board still felt bound by the decision to liquidate the pound sterling investments and to repatriate the proceeds.
“This was despite their failure to do so for more than a year…The Directors gave as the reason for the delay, the strengthening of the pound in 2009 which helped to boost the Society’s income statement.”
Ram pointed out that as the Cambios show, Sterling has slid recently, relative to the Guyana dollar, albeit modestly.
He said that what is more troubling, in the near term is that the currency faces considerable unpredictability following a hung parliament in the UK, in which the Conservatives have teamed up with the Liberals to displace Labour from government, introducing a political dimension in the currency equation.
He said that this is on top of several structural considerations of an economic nature that suggest some weakening of the pound in the short term.
The Accountant by profession said that first there was the need to address the high budget deficit (in the UK) with unpopular austerity measures such as deep government cuts and increased taxation.
He explained that the country’s national debt problems grew after the Labour Government had to spend billions to save the financial sector.
He also described the performance of the economy of the UK as laggard.
“The UK was one of the last western economies to come out of recession and growth is likely to be very modest.”
He pointed to the contagion effect of spilling over from the difficulties faced by Portugal, Ireland, Italy, Greece and Spain.
He did state that as the UK economy improves, the pound will strengthen and the Guyana dollar value of the NBS investments will increase.
“How fast that will happen is anyone’s guess but it is not something I think the Directors of the NBS should bet on…The pound sterling has been like a cyclical yo-yo with gains and losses evening out after a number of years by which time inflation has taken its own toll.”
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