Okay, so I know this is totally my fault but I’ve lived my entire adult life in a struggling economy. It’s just that... I can’t help myself to a bit of austerity! And recessions? Don’t get me started on recessions. Straight into my veins, please!
Anyway, with Boris Johnson dangling a no-deal Brexit over our heads like the Tory grim reaper, the pound dropped to nearly the price of a euro earlier this week. Why exactly is the pound dropping? I reached out to Brad Holland, the director of investment strategy at Nutmeg.com, for an explanation.
“Like every financial asset around the global system, there are traders who decide the price of the sterling,” he explained. “Obviously, with Boris Johnson now in No 10, the probability of a hard Brexit is much higher than it was six months ago, and that’s a weak sterling scenario because it gives a lot of uncertainty to what the environment will be like after October 31st. Currency markets tend not to like uncertainty.”
So, it’s not that your money is no good here. It’s that your money is only good here in the UK. What’s worse is that it’s currently summer – the season where we usually get a break from the grind and evacuate this hellish island on holiday. Here’s how much everything now costs on that Berlin city break you’ve got coming up!
PRICE OF A PINT
The official metric of a location’s priciness. This year you were good and planned ahead, didn’t you? You got yourself a shiny new Revolut debit card that doesn’t incur extra charges abroad, but unfortunately, it’s bad news! No amount of fiscal savviness will save you here, my friend. While the beer is still cheaper than London, the average cost of a draught beer in Berlin is €3.50. Before the Brexit referendum, the exchange rate was 1.44, so you were paying £2.43. Now it’ll cost you more – around 80p more, thanks to today’s exchange rate of 1.08. Time to crack open the stubbies!
But why is it more expensive? Here’s a nice and simple example to get our heads round exchange rates. Let’s say, you want to buy a fresh pair of creps on your holidays. If the trainers cost €100, you’re now paying around £92.59 and that’s without the addition of exchange fees. In the good old days, with an exchange rate of 1.44, the shoes would have cost you a lowly £69. Nice? Not nice!
There’s always that one mate who wants to book a holiday 18 months in advance and this time, it paid off. Because you booked your Airbnb in advance, you paid the exchange rate at the time of the purchase. In future, not only will you have to gamble on a place not being a complete fucking dive, you also have to gamble on the stability of the pound to get the best deal. Great!
Nerdy as hell to know this, but airlines pay countries for flight space. A British plane travelling from Heathrow to Berlin Airport will incur airspace fees from two separate countries – Netherlands and Germany – both of which will be charged in euros. Even though you pay in pounds, the air fees go up and so does your ticket because the airlines certainly won’t pick up the tab. Sorry, mate!
The minimum fare charge in London is £4. The minimum fare charge in Berlin is €5. If the pound continues on its path and eventually becomes the same value as the Euro, it’s going to be 20 percent more expensive to forget your wallet and nip back to the flat. Guess it’s time to learn how the metro works?
Not-so-fun fact for you: most sun cream is currently considered to be a cosmetic product in the UK. The government slaps 20 percent VAT onto every purchase of SPF because, for some reason, they think that not getting skin cancer is a luxury. If you didn’t bring any with you and it’s a particularly sunny day in Berlin, the VAT is 1 percent less than the UK’s 20 percent, so you could argue that you’re saving a single percent on it even if the pound and euro equalise in value. But that’s only if Ambre Solaire haven’t just pocketed the difference.
A BAG OF DRUGS
Heading to Bergain and looking for some pingers? Most of the cannabis and MDMA in Europe comes in from the Netherlands. As there’s no border between Holland and Germany, a bad sterling won’t affect the price of drugs, but you’ll still be paying in cash which was traded at a shitty rate. Let’s say, before Brexit, a €30 gram of MD would cost you just over £20; now it'll cost you closer to £28. A €40 gram of coke would set you back a little more than £27; now you're paying £37. Basically, you’re paying about a tenner more for your fun. My advice? Look down the back of your sofa for euros that you exchanged before you’d ever even heard the word ‘Brexit’. What a time to be alive. Take me back.
It’s the year 2023. A no-deal Brexit played out just as Boris planned, the £100 note is now the cheapest form of British currency. “One currywurst and chips please,” you wretchedly stutter to the kind German man after sinking four steins of 8 percent ABV weiss beer. “That’ll be four euros,” he replies, or as it’s more commonly known, £8,000.