If the slide in the value of the pound sterling continues it would have implications on how much British tourists spend. (FP)
THE FOCUS OF the impact of Britain’s impending exit (Brexit) from the European Union continues to be on its potentially devastating global economic and political implications, and the uncertainty it has spawned.
Barbadians need to be concerned about developments taking place as a result of Brexit primarily because Britain is our major tourism source market, and it is the country from which several hundred locals receive pensions monthly.
Already British visitors vacationing here have begun to feel the impact of Brexit as the value of the pound sterling has dropped against the United States dollar, resulting in their needing to spend more pounds to get the same value in local currency.
Likewise, Barbadians whose pensions are paid in pound sterling from Britain would have received less local currency when the notes or wire transfers were changed last week.
Indeed, based on the published Central Bank of Barbados’ exchange rates between Thursday, June 23 – the day of the Brexit vote – and Friday, July 1, the pound sterling has lost almost ten per cent of its value.
That is, if a tourist or pensioner presented £100 in notes to a local bank on July 1, he would get BDS$28.33 less than he would have received on June 23. And if they sought to exchange £1 000 in notes, that individual would have received BDS$283.34 less.
If this slide in the value of the pound sterling continues it would have implications for how much British tourists spend in future as most of them would have budgeted for their holiday.
Put another way, even if Barbados can maintain the number of British tourists coming, there would likely be a reduction in their spending. This has implications for our tourism sector and the viability of hotels, restaurants, taxis, pleasure craft, and so on.
And for pensioners, this slide can impact their quality of life as their pension is fixed. It could well mean buying less groceries or debating which utility bill not to pay one month to ensure car payments or the mortgage can be paid.
On the flipside, the slide in the value of the pound sterling means it now costs less for those going to Britain to study or for a vacation. Again based on the published Central Bank of Barbados’ exchange rates, an individual would have paid approximately BDS$29.52 less to purchase £100 in notes between Thursday, June 23 and Friday, July 1.
For a Barbadian student paying £5 000 for tuition and accommodation fees at a British university for September, he would have paid BDS$14 893.25 on Thursday, June 23 plus the cost of the wire transfer and any other bank charges.
On July 1, that same transaction would have cost him BDS$13 426.10 plus the service charges – a whopping saving of BDS$1 467.15.
Economics apart, there are political lessons which Barbadians can learn from Brexit. The most significant of these is the behaviour of politicians who seek to capture voters’ imagination with slick slogans, simple solutions to complex issues, and the comedic characterisation of opponents. Yet, they are short on details of their plans.
Based on how the “Leave” camp pulled back on some key statements made to secure the exit vote, it is clear that voters need to be more discerning about the political promises being peddled. Don’t just take them at face value.
Secondly, don’t be swayed by simplistic solutions. If the answer seems so simple and straightforward, it most probably is not the way to go.
Don’t dismiss experts
Third, listen to the arguments that do not necessarily promise the miracle fix being sought, but logically explains what could be achieved given the available resources.
And fourth, don’t be quick to dismiss the experts – especially those from independent institutions. This latter point should be particularly noted as otherwise seemingly responsible politicians are often dismissive of the most reasoned argument from trained professionals as long as it contradicts their agenda.
In the pro-Brexit campaign, for example, Conservative member Michael Gove – now a candidate for prime minister to replace David Cameron – in dismissing the opinions of respected analysts on the consequences of Britain leaving the EU stated: “I think people in this country have had enough of experts.” Doubters were also berated.
Barbadians should take note too, of how the fear of immigration, freedom of movement and loss of sovereignty was used to telling effect. Such persuasive arguments have been heard here and in other Caribbean territories to question the relevance of Caricom and the Caribbean Court of Justice.
Also noteworthy was that despite factual evidence to show Brits what was being said was untrue, the truth either got drowned out in the hype, or people stuck with the lies because it reinforced their personal views.
This clearly demonstrates the need for ongoing public dialogue on important issues like the importance of Caricom and how it benefits each citizen.
Sanka Price is an independent journalist who specialises in economic and political reporting.