nivlad

at last some good news (for us living in Canada anyway). The interst rate has increased by 0.25% in the UK and the pound is on the way up against the $, come on $2.20

Souvenir

Screw that. I've got a chunk of cash sitting in the UK waiting for $2.40.

I can dream, can't I?

iaink

Its hardly good news if you are in canada, wanting a good rate to visit the UK on

MarkG

2 or 3 more rate rises in the UK and you might get it .

Souvenir

I remember the heady days of $2.70. Those were the times........

Go for it BoE. I could do with the cash.

Tableland

Rather than worrying about UK rates, I'd be more concerned about the forthcoming US recession if I were in a country with 85% of its trade tied up there.

MarkG

True: if there is a US recession then the Canadian dollar will be dragged down with it, so $2.50 in the next couple of years may be a real possibility.

Tableland

$2.50 is a very real possibility. A recession in the US seems likely within the next 18 months. Look at what they're going to have to start doing with their interest rates down there. You can't buy toys like they've been doing and avoid the cash register for ever.

iaink

Sure you can, they have been running up the defecit for ever. No one has a big enough stick to go money collecting from the US govt.

Tableland

It's not just Canada that will suffer either. Other countries will have to follow suit and fall into line with Uncle Sam's economic shadow as it lengthens around the world. But just as Canada benefits moore than other places from a strong US economy, it suffers most from a weak one.

A long-term forecast should include the fact that the US is in relative decline, and probably permanently so. North America is gradually descendant in economic terms, and this is because China and India are expanding.

If the Canadians were wise they might start thinking about reducing their dependence on the US economy and increasing their international trade portfolio somewhat.

Tableland

But they haven't. I think they had a budget deficit of something in the region of 300 billion when Clinton arrived, and when he left the economy was in surplus. Bush has now put the Yanks around 400 billion in the red again.

They go in the red, and they're dragged back into the black, and they go in the red again. Up and down. Pretty soon it's going to be time to pay the store, and when they do, the True North will know all about it.

iaink

Not without a change of administration though, and there are a few years to wait for that, if not longer. They voted for Bush twice (more so the second time!), so I have little faith in the abilty of the US electorate to give a damn.

MarkG

Yes, but Clinton did that by redefining 'deficit'. There was never a year while Clinton was President when the US national debt actually went down.

Of course that applies both ways: while Bush has been running up '$400 billion deficits', the US national debt has been increasing by more like twice that amount in the same year. And reportedly he's added several trillion dollars of unfunded liabilities through new welfare programs.

Something major will have to change in America in the next twenty years: they can't keep borrowing that much money forever. Canada at least has oil and commodities that they can sell to the Chinese and Indians if their economic growth becomes self-sustaining rather than reliant on cheap credit in America.

Tableland

I wouldn't be so certain - especially if my financial well-being was so closely tied to it. Who knows what will happen on 7 November? And I suspect there will a Democrat in the White House at the next election. It is unlikely they will vote in a Republican after two terms of George W. Bush.

If you had to bet, then I would bet on a mildly progressive Democrat with a view to increasing multilateral relationships in the world and getting the US deficit under control. The 2009 - 2016 years will be one of belt tightening in North America and they'll just have to get used to higher fuel prices, house prices, interest rates and mortgage repayments. It's the way of the world.

Tableland

I'm no fan of Clinton, but he controlled things by cutting public sector jobs and slashing military funding etc. There might be an argument about his "redefining" things, but we all must agree that he left economy much healthier than when he inherited, and that was my point - merely to show that governments sooner or later have to clean up their mistakes.

Canada has the world's second biggest oil supplies in Alberta (so long as Alberta remains in Canada, but that is *definitely* another thread). The problem is that these oil supplies are in the tar sands and are expensive to extract and require a lot of processing before they are useful. Better to have it than not, of course. But this was my other point - Canada shouldn't have an 85% dependency on the US for trade. Crazy.