By Muvija M and Aiden Nult
LONDON (Reuters) – As raindrops fell over gray autumnal London, and sterling tumbled on merchants’ screens, American tourist Heather Davidson saw a sparkling bright spot on her horizon, the chance of ever cheaper candy in Covent Garden stores.
Across town, the capital’s financial district was still reeling from the impact of new finance minister Kwasi Quarting’s tax cuts which, as the largest since 1972, would be financed by massive government borrowing.
The British pound plunged after the cuts were announced on Friday and fell again on Monday to a record low. There is a lot for bankers to think about. But the sums were simpler for the tourists. As the pound fell in the pockets of Londoners, the purchasing power of visitors’ currencies soared.
Wearing a light green raincoat and purple-rimmed glasses, Davidson, 61, said he spree near Buckingham Palace.
“I’ve just been to Covent Garden and walk along the shops there and purposely don’t go in some places. Maybe I’ll be back.”
Across town, gray-suit workers who are paid in sterling were much less optimistic.
“I think there’s clearly some kind of recession coming, if it isn’t already,” said Jason Emery, director of programs at the City of London IT firm.
“We just have to work through it. Arguably you have to keep spending to try to get it back. If we can get through Christmas and the first quarter (the first three months of 2023), we might be fine.”
IT consultant Antheia Lou was concerned about the broader economy, rising borrowing rates and the cost of imports.
“I’m just wondering how the government will deal with that or the Bank of England, I don’t know if they will control the rate or print more money.”
Politics was not far from the surface.
Retired union official Mick McTiernan saw the tax cuts and the rest of the Quarting package as an attempt by the Conservative government to appease its wealthy donors.
“It is stealing from the poorest of society and giving money to the richest. It is pure nonsense. Given the way the pound is going today, it will end up in complete disaster,” he said.
Any disaster was out of reach for the holidays.
“That’s a big difference – when you get more bang for your buck it makes people want to travel and that’s the thing,” said David Appleby of Sydney, Australia.
Another visitor from Australia, Tony Cosford, was busy collecting numbers.
“I’ve been here for four weeks,” he said with a wry smile. “The change in the exchange rate is about 5% so I will get 5% more. It allows me to buy another pint.”