THE pound sterling is heading towards parity with the euro single currency and this is despite the fact that the euro zone is suffering one of its biggest slowdowns to date. The woes which continue to hit sterling are a clear reflection that the British government´s economic policies are not working (at the moment). For the Balearics the fact that sterling is so low against the euro will make it very difficult for the tourist industry to make a full recovery. Our holiday survey reveals that British tourists are finding the Balearics very expensive. Obviously other destinations, outside the single currency, are going to do much better with British tourists because they will find it much cheaper. What concerns me is what is going to happen when Europe starts to recover and the British economy continues to struggle? Could the pound fall even further against the euro? The British economic growth figures out this week didn´t paint a very bright picture of the state of the economy. Growth is still very modest. There is talk that the coalition government might have got their sums wrong and the huge public spending cuts could push the economy back into recession. Obviously all this is bad news for sterling and to some extent the Balearics. If you look back at the days of great economic growth in the Balearics it was thanks to some extent to the strength of sterling against the euro. Unfortunately, those days have now long gone and the islands are suffering.
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