Daily Mail

Euro’s roller coaster ride

- Hamish McRae

YOU will be feeling a bit poorer than you expected to be if you have just come back from a holiday in Europe. By yesterday the pound was down to €1.08, the lowest it has been since the dire days of 2009.

The euro has risen against the dollar too, at $1.20 the highest for 18 months, as it suddenly seems to have become a safe haven in a jittery world. What should we make of all this?

Well, first of all, it is a reminder of how swiftly, and how viciously, fashion in markets can change. Sterling has been in the doghouse since the Brexit vote, but two years ago it was above €1.40 and was the safe haven against the troubles of the euro.

A few months ago the dollar was riding high and the markets were talking about it reaching parity with the euro.

Now there is talk the euro could go to $1.35. This is what markets do, and good luck to anyone who thinks they can predict which way they will move next.

The second thing to remember is that while the weakness of the pound against the euro may be embarrassi­ng to the Government at this tricky stage of the Brexit negotiatio­ns, it has brought benefits. Just this week the Nikkei Asian Review reported that Nissan will be increasing its car production in Sunderland by 20pc to 600,000.

It will also increase its UK parts content from 40pc to 80pc.

So much for all those scare stories that it would pull out of the UK if we did not give it sweeteners to stay.

You can’t keep on devaluing, but in an uncertain world having a flexible exchange rate is a great shock absorber.

And the third thing is that there are bubbles in markets: the dot-com boom at the end of the 1990s, the banking boom in the run-up to 2008, and in all probabilit­y in the bond markets now. When interest rates eventually get back to more normal levels, which major currency is the most vulnerable? I’ll give you a steer.

The country with the world’s third-largest sovereign debt is Italy. And what are those debts denominate­d in? Euros, of course.

Texan resilience

TEXANS are tough. No-one should downplay the misery and suffering endured by the people of Houston and its region, and it is not over yet.

However, it is surely both encouragin­g and humbling to see the robust way the city and the state are coping with catastroph­e.

It is a reminder that the US is bigger than the sum of its parts, bigger than the politician­s of Washington, the money-movers of Wall Street, and the princes and princesses of Hollywood. It is a resilient nation.

This is also a lesson in economic and financial resilience.

Houston is the fourth largest urban agglomerat­ion in the country.

Hurricane Harvey has taken out 10pc of US refining capacity. The insurance bill?

Well, we don’t know but it could be comparable to Hurricane Katrina in 2005. Yet, while the markets are off a bit that has more to do with global concerns than storm damage. No-one doubts the ability of the country – or its citizens – to tackle the challenges of reconstruc­tion and to pay for that.

This tells us, if we had ever forgotten, just how big America is, and big in all sorts of ways.

Denmark’s car tax

GOOD news for Danish petrolhead­s. The government is planning to cut the tax on new cars to 100pc – yup, that is a cut.

So a low-spec Golf would come down from about £26,000 at the moment to £23,000, which may not sound a bargain – as in the UK they are around £18,000 – but is clearly an advance.

The reason, as explained by the country’s economy minister, Simon Emil Ammitzboll, was that it was ‘not fair that we, living in one of the wealthiest countries in the world, are driving worse cars than our neighbours in Sweden and Germany’.

I like the impeccably liberal Scandinavi­an definition of fairness: that everyone should have as good a car as their neighbours.

Maybe it could catch on here: no one need ever feel the tiniest bit guilty about splashing out on a nice new car.

Buy a British-made one, in the spirit of Brexit, and you can be patriotic too.

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