As US Dollar Envelops British Pound; the Lesson from Uwadiegwu

Possibly by December 2023, the US Dollars would be stronger than the Great Britain Pound. You can blame Russia’s war in Ukraine and the associated impacts on global energy prices. Also, you can add the impacts of Brexit – and the recently announced century-old conversative playbook of tax cuts in a drying treasury.

But here is the deal: the biggest challenge for Britain in the league of G7 (and G20 extension) is that since 2000, no British company has joined Fortune Global 500 (hope I am right!!!). Most of the ones there are century old companies which Britain used its imperial power to grow.

When innovation stalls, currency struggles. It is as simple as that. The US dollar is the safest currency to store wealth at least this decade because with companies like Apple, Google*, etc, America has a great defense no matter what happens in Washington DC.

Do not worry about the US debts that much. You know why? The debt is denominated in US currency which means they can zero-out the obligations in many ways unlike other countries which have to earn USD to pay their dollar debts.

In an Igbo novel (Uwadiegwu), the man dropped a great hint: when you borrow, go to your kinsman so that if the debt goes bad, he may lock you up but at the same time he would be expected to take care of your family since he is your kinsman! That is how debts work: pains are lesser when the debt is home.

Russia’s war on Ukraine will cost the world $2.8 trillion by the end of 2023, said the Organization for Economic Co-operation and Development (OECD), adding that the fallout has caused it to cut its growth forecast for the global economy — again. The 38-member intergovernmental forum now expects global GDP to grow 3% this year, and 2.2% in 2023, compared to pre-war projections of 4.5% growth in 2022 and 3.2% in 2023. Even though the war’s ripple effects have hurt food and supply chains globally, the OECD warns Europe risks paying a heavier price if energy shortages worsen this winter. (LinkedIn News)

Comment on Feed

Comment 1: Thank you for your insight. On britian, you are spot on! On Europe, data available says the last decade has seen a surge in European markets and economies led by Germany and a few others. This growth undoubtedly was powered by cheap energy from Russia. Germany at the epicentre of Europe enjoyed everything from discounted oil, coal to cheap gas. This lowered their production cost and give them production edge. Coupled with their technological advancement that rivals the west, the stage of trade manipulation was set, slowly, and carefully.

This regional growth continues to restructure globla trading map. The Eurozone despite certain challenges in a few member countries seem the most stable and the biggest winner of the last decade but they were silent about the quantum dislocation which the “evil oil” as labelled by UN seems to be providing.

China, was leading world growth from Asia from electronics, space to automobile. The visionary and strategic growth by these 2 giants worry many political and business leaders from the west, especially as this also translates to stronger political tie and economic transformation for Russia.
The west won’t watch helplessly, they mapped out a stealth offensive – to cut out the root – Russia.

Comment 2: It is long overdue. What is the strength of the Pound Sterling? What percentage of world production does UK produce? Their closure to others evident by the brexit will sink the country. There is serious trouble for UK and I don’t see a way out for them soon. Prosperity goes beyond human and economic theories, sometime, love and warmness play a great role in it. UK committed a grave mistake by deleting herself from EU. It’s time to face the long term impacts and results.

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.