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Going on holiday this summer?

Saturday, June 18, 2011

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So you have booked your holiday, excited about going, you have your spending money all sorted but there is a problem….... how far will it go?
Exchange rates have had a huge impact on peoples spending power when they go abroad on holiday. The weak pound has been welcomed by exporters but holiday makers do not like it. To explain this I am going to use one of my favourite and longest serving mnemonics - WIDEC.

WIDEC stands for Weak (pound), Imports Dear (expensive), Exports Cheap.
Exports cheap has had British exporters cheering as their products are more competitive abroad and therefore they are likely to sell more abroad (of course this depends on a number of other factors).
Imports are more expensive. We must remember that us going on holiday to France or Spain is an Import in terms of our balance of trade. The money that we spend goes out of the UK. So if imports are more expensive then it becomes more expensive to buy things abroad.
Here is a really good article about exchange rates to help with revision.

Categories: OTHER TOPICS Exchange rates and currencies
Tags: exchange rates, gcse macro, widec

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