The weakness of the US dollar against the euro and the British pound continues to fuel an exodus across the Atlantic of people looking for consumer bargains, but for European businesses relying on profit from selling their products in the States things are getting more difficult.
Simon Derrick, Head of Currency Research at the Bank of New York in London said US companies now have an advantage: “UK goods being sold in the United States are now significantly more expensive than they were five years ago. When you consider that US manufacturing costs are probably the same, that means we are looking far less competitive.”
The British vacuum cleaner maker Dyson is one company that is suffering. It now has to sell more in the US to make the same profit. Gordon Thom heads Dyson in the US explained the rate of exchange problem: “Eighteen months ago we were sending money back, let’s say 1.70 dollar to the pound; so for every 1.70 of profit we made here, I could send one pound back to the UK. Now I need to make two dollars to send one pound back to the UK.” Thom said everyone in Europe is dealing with the same problem.
Since the start of 2007, the dollar is down by over 5% against the pound and the euro and many European businesses selling to the states say they dare not raise prices for fear of losing custom.