New travel advice for Greece

The government has updated its advice to tourists visiting Greece, reassuring them that they can continue to make withdrawals from cash machines up to their usual amount, despite the €60 daily maximum for Greeks, and that there are no restrictions on taking unspent euros out of Greece.

The new advice adds that "the system for paying with debit and credit cards for retail transactions continues to function".

However, travellers are still warned that banking services, including cash machines and credit card processing, could potentially become limited at short notice.

And the suggestion that visitors should take cash for emergencies is hardened.

The official word is now that it should "cover the duration of your stay" and those carrying cash are now encouraged to "take appropriate security precautions against theft".

Pound on the rise

The pound's value measured against a basket of other currencies, including the dollar and the euro, has reached its highest level for more than 4 years.

The trade-weighted index stands at 85.0. It was last at that level on 5th August 2009, during a rally as the financial crisis and recession began to take hold.

The pound has been surging ahead amid growing hopes about the scale of the economic recovery.

The called the trade-weighted index, called the effective exchange rate by the Bank of England, shows the pound's value in comparison to the currencies of our main trading partners.

The index was based at 100 in January, 2005. It fell to 74 in late 2008.

Broken, panic-ridden eurozone

Events in the eurozone in the last few days look mysterious, at first, and on reflection, even more worrying.

This matters because our savings, our pensions and our mortgages could be affected.

What's the mystery? When you think about it, the outcome of the Greek election was the most stability-inducing one that the financial markets could have hoped for.

But they got the jitters immediately afterwards. The returns (or yield) on Spanish 10 year bonds, or IOUs, rose well above 7%.

What that means is that big investors were demanding a higher interest rate to compensate for the growing risk of lending their cash to Spain - even though the Greek result was probably what bond investors would regard as good news.

And the rate has been getting close to unsustainable levels, levels at which the country can't carry on borrowing for long.

Not much had changed in Spain over the previous few days. Yet the Greek outcome seemed to make things worse. Why?

Was it simply because eyes were temporarily averted by the distraction of an election elsewhere?

Or was it because dastardly speculators, profiting from pushing down the value of investments in wobbly countries, were shifting their sights from Greece to Spain?

It seems as though the real answer could be that there is a feeling of chaos, dislocation and deep pessimism amongst the investors and dealers who inhabit what we know as "the markets".

One expert in eurozone bonds just told me:

"This is a completely broken, dysfunctional market, experiencing bouts of panic. And there's a complete lack of confidence in the ability of eurozone leaders to shore it up."

For these operators Greece was a sideshow. In fact, Spain is also a sideshow. Italy is the horror that blocks their vision so much that, in financial terms, they can't see the other side of it.

The reason is that it would cost so much to rescue Spain, it's not clear how an Italian rescue could be paid for. So when they turned their binoculars to Spain after Greece, their hands start shaking again.

Think about it. There are four big countries in the eurozone: Germany, France, Italy and Spain. Can you have two of them on life support?

Hence, the worries about the survival of the euro persist. And, as we keep being told, damage to the euro has a knock-on effect on the UK.

It's what George Osborne and the Bank of England were scared of last week when they announced they would flood our banks with extra lending power.

Then many thought they were acting just in case Greece imploded. Now we know that emergency measures were probably going to be needed, whatever result came out of Athens.

Euro scare story

The European Central Bank (ECB) has dismissed a warning from a UK travel company that holidaymakers should be careful of Greek and Spanish banknotes.


The Association of British Travel Agents (ABTA) distanced itself from the warning as well.


Dial A Flight, which organises travel for 450,000 people a year, told its customers in a blog that "anyone holding Greek Euros may find themselves out of pocket" if Greece were to leave the eurozone and stamp, or endorse, its euro notes to identify them as a new currency.


The company suggests there is a risk that other eurozone members might not accept the notes -- whether or not they had been stamped -- and that Spain might be the next to suffer.


Notes printed in different countries are identifiable from a letter at the front of the serial number: Y in the case of Greece and V for Spain.


But a spokesman for the ECB said "euro banknotes are legal tender in all euro nations" and that they remained legal tender "wherever they are printed".


ABTA said that while no one knows what would happen if Greece left the euro, "A euro is a euro - it doesn't matter where it is printed".


After I started making enquiries, Dial A Flight removed the blog from its website.


There will be lots of scare stories as Greece's problems persist, but if anyone wants to know what the symbols on euro banknotes mean, the ECB provides a handy guide.


UPDATE - and here's what the British Bankers Association says...

"There is no difference between Euros from different countries. They are worth the same from one end of the Eurozone to the other, regardless of where they are issued. The Euro is a single currency and worth the same whether French, German, Greek or Spanish."

Jump in euro rate for tourists

Leading bureaux de change are selling euros at a rate of 1.20 to the pound for the first time in three and a half years.

The jump reflects worries about the eurozone in the wake of the Greek and French elections. But the result is that British travellers are getting 10 per cent more for their money than a year ago.

Travelex is offering 1 euro 20.8 cents -- it was last above 1.20 on 4th November, 2008. The Post Office is paying 1euro 20.7 cents.

High Street banks are still offering lower rates, but some specialist money-changing services will pay even more.

The rate at certain Sainsbury's stores has risen to 1 euro 21.19 cents.

£ buying you more travel money

The pound is rising again in the international currency market, amid continuing worries about the financial state of the eurozone.

Sterling has touched 1.2330 to the euro in the wholesale market today, its highest since June 2010.

What that means is that bureau de change rates are approaching 1.20, having dropped close to 1:1 parity last summer.

Tavelex is offering 1.1950 online.

The Post Office Rate is 1.1940

M&S Money has 1.1788

Pound down 31%

UPDATE: pound now buys 1.2241 euros...

It's only three years since the pound sank to near parity with the euro. In other words, a pound and a euro were worth virtually the same amount.

In the wholesale market you could buy just 1.02 euros with each pound at the end of 2008.

So tourists heading for the Eurozone this week will feel a lot more comfortable about the current exchange rate of 1.2155 euros to the pound (update - now 1.2241) - up 19% from the depths of the financial crisis.

(You get a few cents less than that, of course, once money-changing charges are taken off.)

It's worth putting these numbers in a bit of historical context, though, because travellers face a much lower exchange rate than a decade ago - and businesses are still benefiting from a sizeable devaluation in comparison to their Eurozone competitors.

The euro was born as a notional currency in 1999. The pound bought 1.7510 euros at its peak in May, 2000.

Euro notes and coins were launched on New Year's Day in 2002. Even during during that year the pound reached 1.6404.

So sterling is still 26% lower than in 2002 and 31% down on the millennium year, 2000.

Between January 2007 and December 2008, the pound fell by 32%.

According to the ECB (European Central Bank), the average value of the the pound during this period has been 1.4084, substantially higher than the current rate.

Poop! Poop! Let's borrow again...

"You don't promise," said the Badger, "never to go into debt again?"
"Certainly not!" replied Toad emphatically. "On the contrary, I faithfully promise that the very first opportunity I have, chink-chink, I'll borrow even more!"

Christmas is a good time of year to start thinking up rules.

You can only open one present before breakfast. Spread them out: that way there will be no tears later in the day.

The turkey must be for exactly the right time: 20 minutes a pound at 180 degrees. That way no one will go down with food poisoning.

But you can't legislate against Auntie Vera and Uncle Bob having a row. Or Grandad having apoplexy and falling head-first into his plate.

It's the same with last week's Euro deal. They agreed some new rules, for the future, new restrictions on countries borrowing.

That's OK as far as it goes. The turkey will be nicely roasted.

But everyone knows they have agreed restrictions on borrowing before. And they didn't work.

The financial crisis was so horrendous, it made all that pre-tinkering irrelevant.

And, as with the unreliable Mr Toad, one has to question whether European nations will stick to what they agreed to in that room with Chancellor Merkel.

"Toad, I want you solemnly to repeat, before your friends here, what you fully admitted to me in the smoking-room just now," pronounced the gratified Badger. "First, you are sorry for what you've done, and you see the folly of it all?"


Toad looked desperately this way and that, while the other animals waited in grave silence.
"No!" he said a little sullenly, but stoutly; "I'm not sorry. And it wasn't folly at all! It was simply glorious!"


"What?" cried the Badger, greatly scandalized. "You backsliding animal, didn't you tell me just now, in there..."
"Oh, yes, yes, in there," said Toad impatiently. "I'd have said anything in there. You're so eloquent, dear Badger, and so moving, and so convincing...but I find that I'm not a bit sorry or repentant really, so it's no earthly good saying I am; now, is it?"

Of course, Toad was talking about his new obsession with fast cars - "Poop! Poop".

But I wonder when the backsliding will start in Europe?