So the pound has slumped to $1.62 after Mervyn King’s gloomy speech in Leeds last night.
More bad news for Newsquest, News International, Conde Nast and IPC — just four of the companies whose remittances to corporate HQ in the US have to be transformed into dollars before they can hit the parental P&L.
A few months ago, every pound these companies earned in the UK was worth almost $2.00. Now each of those pounds is worth 20% less. And that’s before we start to consider the effect of collapsing ad sales in the UK.
Or a weaker pound’s effect on consumer behaviour. (For exporters, it’s great news — assuming that there’s anywhere left on the face of the planet that’s importing stuff. But for the consumer economy that props up adland, the news isn’t necessarily good.)
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Presumably, however, we’ll reach a point when the collapsing pound doesn’t look like entirely bad news for the UK subsidiaries of US-headquartered companies.
If and when they slip into a loss, the pound’s weakness will presumably have the effect of minimizing the apparent damage.
To every dark cloud, a silver lining. . .
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