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The falling pound could increase the cost of a pint at the pub because of the rising costs of imported beer and hops, a brewery boss warned today.
Today, the pound fell to its lowest level against the dollar since decimalization began in 1971. It dropped to just $1.0327, even below its 1985 baseline of $1.0545 – parking panic in some markets.
Paul Davies, CEO of Carlsberg Marston’s Brewing Company, suggested this morning that the fall of the pound could trigger a rise in beer prices.
He told BBC Radio 4’s Today program that the drop was ‘worrying’ for the British beer industry, which imports beer and hops from abroad.
The pound has fallen eight percent since Liz Truss was elected prime minister three weeks ago and has fallen nearly 25 percent since the start of the year. It’s a similar story for the euro
The drop followed Kwasi Kwarteng’s dramatic ‘mini-budget’ last week, as well as a broader drop in global currencies
When asked if the value of the pound mattered, he said: ‘Yes, it does, a lot of the hops used in this country are actually imported and a lot of it, especially for craft brewers, is imported from the UK. United States, so currency exchanges are actually a concern for the industry, sure, and then of course people drink a lot of imported beers from Europe, and the euro versus the pound is also something that we’re watching closely at the moment.
“Of course things will go up, I would say as an industry we generally use British barley and we use a lot of British hops, but of course if you drink double IPA you have a lot of Citra hops and other hops from the United States, and that will have to be passed on to both the customer and the consumer at some point when prices are so volatile.’
Since many major commodities are priced in dollars, a weak pound pushes inflation up further. Markets are now estimating that the nominal rate will hit 5.5 percent next year, causing further misery for families.
The cost of government borrowing also rose as bond yields soared to their highest rate in a decade amid speculation with rate hikes. Chancellor Kwasi Kwarteng plans to use an increase in loans to fund public services, while cutting taxes at the same time.
Paul Davies, CEO of Carlsberg Marston’s Brewing Company, suggested this morning that the fall of the pound could cause a rise in beer prices.
Ministers have declined to comment on currency movements, but allies of Mr. Kwarteng blamed “city boys playing fast and loose with the economy.” Labor accused the government of putting the UK on the ‘highway to hell’.
And there are signs of unrest among the Tory, with former Chancellor George Osborne warning it is “schizophrenic” to try to get “taxes from small states and spending from big states.”
Treasury committee chairman Mel Stride swiped at Mr Kwarteng for yesterday pushing for further tax cuts to come on top of the massive £45bn package announced Friday.
“One thing is certain, it would be wise to take stock of how markets are weighing recent economic announcements over time, rather than immediately signaling more of the same in the near term,” the MP said. the Tories.
The weak pound is causing major problems for British businesses, which are faced with increasing costs of importing goods from abroad.
Today a $100 barrel of oil will be £95, compared to £74 in January. The struggling pound sterling will also add to already skyrocketing inflationary pressures and is likely to further damage consumer confidence as Britain is already in recession and in the midst of a cost of living crisis.
The FTSE 250, which is domestically oriented, opened 0.6 percent lower, although the FTSE 100 — which includes many dollar-earning companies — rose slightly.
A weaker pound means UK importers are getting less bang for their buck when buying abroad than before
Last week landlords warned that pints would still get more expensive even after Mr Kwarteng unveiled an alcohol tax freeze.
In his ‘mini-budget’, Chancellor Kwasi Kwarteng announced that the planned tax increases on beer, wine and spirits would be scrapped as part of a budget full of tax cuts worth £45 billion.
The Treasury claimed the freeze would save £600m and is equivalent to 7p for a pint of beer, 4p for a pint of cider, 38p for a bottle of wine and £1.35 for a bottle of spirits.
But in response to the announcement, Wetherpoon boss Tim Martin told MailOnline: “A freeze on alcohol tax is welcome but the real problem for pubs is that they pay much higher business rates per pint than supermarkets and on top of that, pubs pay 20% VAT on the sale of food. and supermarkets pay nothing.
“As long as this inequality continues, pubs will shrink and supermarkets will flourish.”
What does the falling pound mean to YOU? From traveling to America or visiting the UK, to shopping and dining out…important question and answer as the pound plunges to record highs against the US dollar
By Dan Sales for MailOnline
Why has the pound fallen?
The pound plunged in direct response to Chancellor Kwasi Kwarteng’s so-called mini-budget on Friday, which announced the biggest tax cuts in the past 50 years.
Why did it get worse on the weekend?
Although there was an initial drop following the Chancellor’s announcement, sterling started to gain a little bit. However, Mr Kwateng’s comments over the weekend that more tax cuts were on the way showed a further decline.
As the markets opened, the pound fell toward parity with the dollar before rising again to around $1.06
Why Does It Matter – Could It Get Worse?
It is widely expected that if the pound does not rise, the Bank of England will raise interest rates, meaning debt will become more expensive and affect many things, including mortgages.
Will the Falling Pound Affect My Trip?
Yes, since it has fallen so dramatically compared to the US dollar, it will hit hard-working families in the pocket, especially if they travel abroad to America.
Will it only be the trip to America that will be affected?
Obviously, tourism to the United States will be affected with more expensive vacations and services and goods, when more expensive ones there later on. But there will be another knock-on effect for other countries that could be on people’s destination lists. Panama, Qatar and Saudi Arabia are among the countries that have pegged their currencies to the dollar.
Will it make things more expensive here in Britain?
Britain imports more than it exports, so the falling pound will have a big impact on the cost of those items. Because the pound is so weak, anything imported from the United States will cost more to catch up to the right value before the fall.
What kinds of things can get more expensive?
Currently – for the most recent figures of 2021 – machinery, nuclear reactors and boilers are imported from America at a cost of about $12.94 billion. Mineral fuels, oils and distillation products make up a large number of products coming in, also accounting for about $7.97 billion. It means that stores here have to pass those costs on to customers, which means an increase in some prices.
British Finance Minister Kwasi Kwarteng attends an interview with Laura Kuenssberg yesterday
Will food cost more?
All food imported into the UK will be more expensive as the value of the item will remain the same despite the pound being worth less.
Does this make it more expensive to go to a restaurant?
Possibly, because any additional costs of imported ingredients can be passed on to customers.
How about a drink to ease your worries?
No, even the cost of a pint of beer could be hit hard by the falling pound due to production costs.
Will drinks made in England be good because they are not imported?
Even these can be affected by the issues with sterling as ingredients are sourced from abroad. Paul Davies, chief executive officer of Carlsberg Marston’s Brewing Company, said, “A lot of the hops used in this country are actually imported and a lot of it, especially for craft brewers, is imported from the United States.”
Are there any benefits to the inequality between sterling and dollar?
There are some potential knock-on effects that could bring about an improvement in the UK economy.
The weaker pound could entice US tourists to drop by as they get more for their money
Will it encourage American tourists to come and visit?
Yes, tourists from the United States get more bang for their buck if they decide to stop by. Accommodation will seem cheaper, as will food, services and attractions.
How will this help the situation here?
The more money is spent, the healthier the economy becomes, hopefully leading to the Bank of England cutting interest rates.
Are there any other silver liners?
Possibly the weakness of the pound could make UK exports more attractive to US buyers. Those who buy products from the UK will experience a ‘better value’ effect which could see more trade. Again, this could give the economy a boost.