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.)
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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