Monday 26 September 2022 11:41 AM Beer boss warns slumping pound could increase the cost of a pint trends now
The falling pound could increase the cost of a pint in the pub due to the soaring cost of imported beer and hops, a brewery boss warned today.
Today, the pound dropped to its lowest level against the dollar since decimalisation was started in 1971. It sunk to just $1.0327, below even the 1985 baseline of $1.0545 - parking panic in some markets.
This morning Paul Davies, CEO at Carlsberg Marston's Brewing Company, suggested the fall of the pound may cause a rise in beer prices.
He told BBC Radio 4's Today programme that the drop was 'worrying' for the British beer industry, which imports beer and hops from overseas.
The pound is down eight per cent since Liz Truss was elected PM three weeks ago and down approaching 25 per cent since that start of the year. It is a similar story for the euro
The fall followed Kwasi Kwarteng's dramatic 'mini-budget' last week, as well as a broader fall in global currencies
Asked if the value of the pound mattered, he said: 'Yes it does, many of the hops used in this country are actually imported and a lot of them, particularly for craft brewers, are imported from the States, so changes in currency is actually worrying for industry, for sure, and then of course people drink a lot of imported beers from Europe, and the euro vs the pound is also something we're watching very closely at the moment.
'Of course things will rise, I would say as an industry we're generally using British barley and we're using a lot of British hops, but of course if you're drinking double IPA that requires a lot of Citra hop and other hops from the States, and at some point that is going to have to be passed through to both the customer and the consumer if prices are this volatile.'
Because many key commodities are priced in dollars, a weak pound drives inflation up further. Markets are now pricing in the headline rate reaching 5.5 per cent next year, heaping more misery on families.
The cost of public borrowing also rose as bond yields rose to their highest rate in a decade amid the rate-rise speculation. Chancellor Kwasi Kwarteng plans to use an increase in borrowing to fund public services at the same time as he cuts taxes.
This morning Paul Davies, CEO at Carlsberg Marston's Brewing Company, suggested the fall of the pound may cause a rise in beer prices
Ministers have refused to comment on currency moves, but allies of Mr Kwarteng were blaming 'City boys playing fast and loose with the economy'. Labour accused the government of putting the UK on the 'highway to hell'.
And there are signs of Tory disquiet, with former chancellor George Osborne warning that it is 'schizophrenic' to try and have 'small-state taxes and big-state spending'.
Treasury committee chairman Mel Stride swiped at Mr Kwarteng for insisting yesterday that there are more tax cuts to come on top of the huge £45billion package announced on Friday.
'One thing is for sure - it would be wise to take stock of how, through time, the markets weigh up recent economic announcements, rather than immediately signalling more of the same in the near term,' the Tory MP said.
The weak pound spells huge trouble for UK businesses, which face increasingly higher costs of importing goods from abroad.
Today a $100 barrel of oil will be £95 - compared to £74 in January. Struggling sterling will also increase already sky-high inflationary pressure and will also likely further damage consumer confidence with Britain already in recession and in the midst of a cost of living crisis.
The FTSE 250, which is domestically-focused, opened down 0.6 per cent, although the FTSE 100 - including many companies that make revenue in dollars - was up slightly.
A weaker pound means British importers are able to get less value for their money while buying abroad than they could before
Last week landlords warned pints would still get more expensive even after Mr Kwarteng unveiled a freeze on alcohol duties.
In his 'mini budget', Chancellor Kwasi Kwarteng announced that the planned duty rises on beer, wine and spirits would be cancelled as part of a budget packed with £45billion worth of tax
