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Pound sterling is trading £1 for €1 at some airports after Brexit

Bureaux de change at UK airports are charging fees to Brits already hit by a slump in the value of the pound

Wednesday 13 July 2016 18:17 BST

Consumers are being offered almost parity between the pound and the Euro at UK airports (Reuters)

Holidaymakers heading to Europe will receive just one euro per pound at UK airports thanks to the combined effect of high charges and a Brexit-weakened pound.

Those heading to the US will hardly get a better deal in dollars.

The worst rates are at Moneycorp’s Bristol Airport bureau de change, which gives customers just €1.0008 per pound, according to Caxton FX, a pre-paid card provider.

Scots flying from Edinburgh will get a similarly low rate of €1.007.

Those flying from London airports get the best deal, receiving €1.07, an extra €70 for £1,000 exchanged, from Heathrow or Gatwick.

However, at ICE’s desk at Luton airport the rate slides to just €1.007. At Stansted it is €1.015. All the airport prices were taken by Caxton FX on July 11.

The euro exchange rates offered at UK airports Caxton FX

The pound was trading at €1.194 at 4pm on Wednesday, meaning that consumers could be paying 18 per cent in commission and charges at some outlets.

Exchange rate: “outrageously poor”

“Currency exchange bureaus at the airport have a captive audience, so they can offer outrageously poor rates and are still confident that people will purchase foreign currency from them,” commented Rupert Lee Browne of Caxton FX.

The figures also highlight how far the pound has fallen since the June 23 EU referendum. Since the unexpected vote to leave, uncertainty around the UK’s economic future has seen sterling plummet from €1.30 to €1.19.

The pound has fallen as a result of uncertainty after the shock referendum result (Bloomberg)

It was down again on Wednesday, having moved slightly upwards on the news that the Conservative leadership race had ended and Theresa May would be the new Prime Minister.

On the eve of the Brexit poll £1 would buy $1.50, compared to just $1.32 today, its lowest level since 1985. The timing of the fall will hit millions of UK travellers planning their summer holidays.

Koko Sarkari, the COO of ICE, which runs several of the bureaux surveyed, advised shoppers hit by the falling pound to obtain better online rates than those offered by his company’s airport outlets.

“We do always recommend that customers plan ahead and shop around before they leave for their holiday,” he said.

Holidaymakers can also make their devalued pounds stretch further by putting money onto a pre-paid card.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

nito100

6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

AFP/Getty Images

6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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Sarkari blamed the low rates offered at airports on “distribution, costs of operation, regional competition and other factors such as ongoing volatility in the market.” The company was offering a rate of €1.1372 on its website on Wednesday for home delivery.

A Travelex spokesperson said that the company had to "take into consideration the cost of providing the service we offer at each location," which can be higher at airports.

Mark Horgan, CEO of Moneycorp, which offered the worst rates of the companies surveyed, pointed out that, "foreign exchange rates tend to differ between airports and other retail outlets," because of the costs involved. "Customers can access our best rates by ordering online... and opting to pick up their currency at a designated airport bureau,” he said.

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