IT is quite amazing how the fortunes of the Balearics seem to be so closely linked to the strength of sterling. It is also evident how important British tourism is to the Balearics. There are reasons to be optimistic for the coming year because all financial indicators point to a rise in the value of sterling against the euro. I read one newspaper report which suggested that by this time next year sterling may have returned to its old value of 70 pence per euro (which is great news for all on this island because it could help relaunch the property market and ensure that local hotels are full). While the ills of the British economy are evident for all to see on mainland Europe things are as gloomy or even more so. The European Central Bank is going to have little option but to cut interest rates, probably down to the one percent mark, in an effort to revive the euro-zone economy. This will lead to rise in value of sterling and probably the dollar against the single currency (because both the U.S. and the UK have savagely cut interest rates already while mainland Europe is still pondering what to do next). The coming months are going to be hard, very hard for some but it does appear that there is light at the end of the tunnel. 2009 might be a good year afterall!
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