The British are $ 5 billion poorer than they thought

British Prime Minister Theresa MayBritish Prime Minister Theresa May.(AP Photo/Matt Dunham, FILE)

Britain’s finances are in a far worse condition than previously assumed. The country’s statistical agency has made a drastic write-down after a methodology change.

The Telegraph was able to tell British newspaper readers that the UK’s wealth has gone from £ 469 billion in plus to minus 22 billion.

This is equivalent to a downward adjustment from NOK 4,930 billion to minus NOK 231 billion.

“The fear is that it will knock the bottom out of the pound. If using the past 40 years of history are a guideline, the pound can fall by 20 percent, says Mellom Simon Derrick, currency strategist at Bank of New York for The Telegraph.

It is the UK statistical agency ONS that has found that the UK assets are worth over 5 billion less than previously assumed. This is the key to the “Net International Investment Position”.

– In the past, ONS has underestimated how much of British shares are owned overseas. Thereby you have overestimated how rich the British are, says Mikael Milhøj in Danske Bank.

However, he is  not amongst those who believe the figures should cause the alarm bells to ring.

“I do not think it’s so alarming, because it is not caused  by the British owing a lot of money. They are just at about zero, he says.

Nor does he think it will mean anything for the economic development, as both British companies and citizens are aware of how much money they have available to spend, and this is what controls their economic behavior.

 

©  NTB Scanpix / Norway Today

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