Why UK Customers Should Upgrade their Camera Equipment Now!
If you live in the UK you will be aware that we voted to leave the EU in the June referendum.
What you might not be aware of is the impact this has already had and will have on the cost of cameras and lenses.
So far some of the main manufacturers have held their prices here but if you look at the value of Sterling on the internation markets it has already plumetted by 18% since the referendum result. The companies will have to pass on these costs soon.
After a brief rally when it looked like the In campaign would win the Pound has been losing value since March 2016 and after Fridays Asian crash it now sits at $1.24 against the US Dollar.
Why does this affect us?
Almost all camera brands are imported and because of the weak pound the cost of imported goods goes up.
Our pound now only buys us $1.24 of imported goods against $1.49 before the referendum.
So with an 18% drop in value, a camera costing £1000 pounds previously, is now likely to cost £1180.
Surely the Pound will recover so it is better to wait?
In the long term this may be the case but I suspect (and most market analysts predict) that Sterling has not yet reached its lowest value.
Respected analysts at HSBC suspect that Sterling will drop to $1.15 or lower by the end of next year.
I suspect it will go lower based on the volatility and fluctuations I have seen in the money markets since Brexit.
It already dropped to $1.18 on Friday before recovering.
Here is why it will go lower.
The EU is in a very difficult position financially and politically after Brexit.
When the UK voted to leave, the EU lost one of its largest economies and largest financial contributors.
This happened at a time when Italy is on the brink of a banking crisis.
The Greek debt crisis hasn’t been solved despite the EU exhausting almost all viable options to aid recovery.
The Spanish and French economies are stagnant.
Politically there are movements within major European countries to pull back from the EU and in some cases leave altogether.
The Front National in France is gaining momentum alongside similar movements in Greece, Holland and now, even the Germans are getting a little fed up with financing the EU and the migrant crisis is testing their patience.
What does all this have to do with the value of the Pound?
With this backdrop of economic and political unrest it is impossible to see how the European leaders are going to allow the UK to be seen to leave the EU and yet retain any of the benefits of membership.
The dream of UK politicians is to stop free movement of people while retaining access to the Single market.
The EU simply will not let this happen because they fear it would encourage other countries to leave and expect the same deal.
The EU is going to have to punish the UK during its negotiations to leave the EU to keep other countries in line.
Self preservation of the EU will take priority over economics.
The French president Francois Hollande has already said as much just recently.
That means in all liklihood we are heading for a Hard Brexit.
This will entail losing access to the single market because the British Prime Minister Theresa May has indicated that regaining control of immigration policy is her priority.
If the EU considers retention of Free movement of people to be non negotiable to retain single market access and the UK wont negotiate this point then the negotiations have nowhere to go.
That will panick the money markets as they see a hard Brexit scenario as the most damaging to the UK economy and this will drive the value of Sterling even lower.
That will result in the pound being worth less and therefore cameras and all other imported goods will become more expensive.
So if you are looking to upgrade your gear in the next year or so it is definitely advised to do so sooner rather than later or you could be paying much higher prices.