I sat next to an Australian cattle farmer at a dinner a few weeks ago. He was thrilled with Britain, in particular with the price of our farmland. Why? "It's just so cheap." That may sound odd to a British-based farmer. An acre of good-quality arable land will set you back a good £8,000 these days. That's a rise of nearly 200% over a decade, a return that is out of whack with almost everything else even prime London property is only up 100% in the last ten years.
But we think land is expensive because we look at it in sterling. My new farming friend looks at it in Australian dollars. And the Aussie dollar is up nearly 60% against the pound in the last five years alone. That bears repeating. You can buy 60% more pounds per dollar today than you could in 2007.
And it isn't just Australians who might think British stuff looks like something of a deal in their own currencies. The Japanese yen is up 87% against the pound over the same time period. The Singapore dollar is up 59%; the Brunei dollar 53%; the Canadian dollar 46%; the New Zealand dollar 43%; the Thai baht 42%; the euro 23%; and the US dollar 21%.
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The truth is that pretty much every currency you can name has risen against the pound since the financial crisis began. Ignore the likes of the Syrian pound and the Burundi franc, and our national currency has been one of the weakest in the world for some time.
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This matters because it explains much of our inflation. The price of everything we import, from energy to shoes, goes up as our currency goes down. Our inflation explains much of our economic weakness. Look to the latest Vocalink take-home pay report and you will see that real (adjusted for consumer price index inflation) take-home pay for workers in the private sector was £56 lower this August than last August. For workers in the private sector it was £104 lower.
People with less money buy less stuff which is why the Office for Budget Responsibility in its annual report earlier this week blamed "unexpectedly stubborn inflation" for Britain's miserable levels of economic growth.
This is something that all those who want Britain to turn back from the coalition's deficit-cutting plans might like to consider. If we look like we might stop making an effort to deal with our debt we might get away with it in the debt markets the Bank of England can just up its quantitative easing to keep gilt yields down. But we won't be able to protect our currency. It will tank again. Then there'll be more "stubborn inflation" and even less growth.
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