Not Such a Happy New Year for MEPs as Euro Slump Slashes Salary by £300
The long expected decline in the euro means a happy new year for British holiday makers looking to jet off for a few days to the Continent: but our payments to the EU budget won’t be falling despite the more favourable conversion rate.
Families can expect to save hundreds of pounds on short haul excursions thanks to a slide in the value of the euro which has created the cheapest holiday booking season since the financial crisis in 2008, the Telegraph reports. With the most popular summer destinations in countries which have joined the single currency, as well as popular weekend City breaks, it means holiday makers can expect to save anything between five and 15 per cent on accommodation costs – charged to travel agents in euro as well as when done directly for travellers, as well as the costs of flights. And when arriving in their destination they can expect a saving of up to a fifth on eating out and excursions. With the miserable weather and the post Christmas blues creeping up on tired commuters and worn out parents January already experiences a surge in bookings. Sterling is trading seven per cent higher against the euro compared to last spring and the highest level against the single currency for more than six years as the currency zone has had overwhelming political interference and bail outs as well as high yields on five and ten year government bonds.
Consumers can now buy their euro for 78 pence to the pound, compared to six pence higher in March 2013.
But while this might be good news for holiday makers it is bad news for MEPs and bureaucrats who will see their take home pay be worth considerably less when converted into Sterling. Compared to last year, they will take home about £300 a month less. In an interview with German newspaper Handelsblatt, President of the European Central Bank Mario Draghi warned that low inflation was having a negative effect on the eurozone’s “fragile and uneven” economic recovery; something which the already volatile and speculative FX markets will have reacted to. On Friday, the Euro tumbled to its lowest level against the dollar in four years. Draghi also suggested that the ECB is once again preparing to inject cash into the currency union if the longer term outlook fails to improve. While a lower value euro might be bad news for Germany and other economically strong countries, for those suffering from the monetary constraints of the EMU it means their exports look cheaper in comparison and could finally herald some positive news for their balance of payments should consumers focus on purchasing domestic produce. But because the ‘conversation rate’ is set at the exchange rate on the final day of the previous year, the fall in euro against Sterling won’t mean that tax payers get to pay less to the Brussels slush fund. Following the budget vote by MEPs in the December Strasbourg plenary, the UK’s contribution to this year’s budget was set at €15.29bn which at the current rate of exchange would work out at £11.97bn if we paid using up to date values. This is significantly less than the bill we will be paying of £12.85 bn as calculated at the rate from 31st December 2014. The money would be very useful to the Chancellor in balancing the budget and costing the tax payer less in future debt financing. In December, Lord Hestletine said he thought the UK would join up to the single currency at some point in the future.