US debt default could have direct impact on the UK

Published on July 28, 2011 by David Turner · No Comments

US on the brink of debt

The affect that this could have on the strength of the US dollar and interest rates generally could be extremely important, given the position the U.S.A holds on a global economic scale.

Mike McCudden, Head of Derivatives at the investment experts www.iii.co.uk, describes the idea of no debt deal being struck as “unthinkable”.

McCudden continues “If no deal were struck by 2^nd of August, default would soon follow as the Government would quickly be unable to meet payments for things like interest on its debt, welfare benefit and military pensions.

The world would face a financial crisis of significant proportions…..The impact of the U.S defaulting would be felt around the world for a very long time.”

It is certainly a galling possibility. For the UK in particular, McCudden feels the consequences could be grave. He states that “Here in the UK, the impact would be particularly acute. The US is the UK’s largest export partner, ahead of Germany and France, accounting for $50 billion in trade in 2010 alone.”

Hopes are high that a deal can be met in the coming days to prevent a potentially disastrous default.

The UK, and major countries throughout the world, will certainly be watching the situation with interest.

Transferring money to the Unites States

Are you looking to invest in the Unites States? If you are, think carefully about how you will be transferring money to the United States. Foreign currency exchange rates quoted by banks are usually worse than the exchange rates available through specialist currency dealers.

So if you are sending money to Chile – which you will inevitably have to do if you are looking to make a property investment – be sure to compare the market before you buy your overseas currency.