LONDON — For British tourists heading to the
Big Apple to take advantage of a weak dollar and stock up on
bargains, the choice is clear: saving money comes before saving
the planet.
With sterling hitting its highest levels
against the dollar since 1981, British media are cranking up
headlines on the number of people jetting to the United States
to pick up bargain designer clothes and electrical goods.
"The weak dollar is certainly helping a few
shoppers find their way to the US," George Stinnes, head of
investor relations at British Airways, said earlier this month
when the company reported passenger numbers on routes to the
Americas had jumped 7.4 percent in October from a year ago.
Those who have witnessed the sharp-elbowed
frenzy of retailer Harrods’ sales may not be surprised to learn
that for some shoppers, the lure of cheap trendy Ugg boots and
iPods outweighs the 2,000 kg or so of carbon dioxide the return
flight pumps into the atmosphere.
The transatlantic bargain-hunting contributes
to Britain’s status as the eighth-largest emitter of carbon
dioxide in the world, according to US Department of Energy
figures.
"It’s business travelers who should worry
about carbon emissions," said Martin Smithers-Brown from London,
checking in for a flight to New York at Heathrow airport for a
four-day shopping trip with his wife and two friends.
He said he planned to pick up electrical
goods such as iPods and cameras, while his wife Krista had her
eye on brand-name clothes. "You can’t beat the dollar at the
moment," she said. "It’s always cheaper over there. Two years
ago I was paying 20 pounds for a pair of Levis there. Now it’s
even cheaper."
The shoppers are crossing the Atlantic as
concerns at home mount about the scale of fallout from the US
credit crunch and British retail is nervous: retail sales fell
in October for the first time since January.
"It’s really good value — you have to really
control yourself because the pound is so strong against the
dollar," said Londoner Rhoda Ogan, visiting New York to see a
friend.
But if travel is included, Britons who ignore
their carbon footprint as they leap aboard transatlantic flights
to bag cheap luxuries may well end up spending more than they
would at home.
Many major currencies have boomed against a
dollar weakened by investor fears about the health of the US
economy — particularly after banks announced over $50 billion
(24 billion pounds) of write-downs on assets linked to the
troubled housing sector.
With sterling at its strongest versus the
dollar in 26 years, a rule of thumb for British shoppers is to
halve the dollar price of goods to get their cost in pounds.
This emphasizes how dramatically cheaper US
goods seem. Add in the cost of a flight and hotel at peak
season, however, and the cost spikes.
In New York, a shopper could pick up an Omega
men’s watch, a pair of Timberland boots, a pair of Ray-Ban
Wayfarer sunglasses and a bottle of Chanel No. 5 perfume for
about $3,750 (1,830 pounds) — about 20 percent less than they
would cost at home.
Add to that the typical cost of the flight
and a weekend in a Manhattan hotel — charging premium rates in
the run-up to Christmas — and the total is 2,850 pounds, adding
roughly 1,000 pounds.
"In the four days I’m here I’ll spend about
$900 and there is no way I would spend that in four days in
London," TV producer Catherine Mark told Reuters by telephone
from New York. "I’m not really that bothered about the shopping,
it’s just exciting being here."
On top of travel costs, returning Britons
face a limit of 145 pounds ($298) in the value of goods
imported, after which they must pay 20 percent tax. Attempted
evasion — or ignorance of the limit — is penalized by doubling
the tax.
Even if more shoppers are heading to the
United States, the Revenue and Customs office (HMRC) says it has
not seen an increase in goods brought back, adding that it
targets mainly large-scale multiple purchases.
"We thought we might get some increased
activity, but in actual fact people seem to be quite well aware
of their spending and ... we haven’t seen an increase in goods
coming in," said Mike Burrell, spokesman for HMRC.
Some shoppers say they unpack US purchases
immediately, and work them to make them look "used" before
flying home.
The bargain-hunt can go beyond consumer
goods. Travelex, a London-based currency exchange company, said
dollar purchases in Britain had risen by 40 percent since the
pound began to hit new highs — partly on demand for shopping,
but also on a gamble that the greenback itself may, at current
levels, be a steal.
"We’re ... seeing that customers are taking
advantage of the current rate by actually stockpiling US
dollars," Antony Hudson, its UK retail director, told Reuters.
"Those travelers actually visiting the States
are changing up much more than they need so they have a surplus
to draw on for a future trip, or others are actually changing up
money now in anticipation of a holiday in the future."
They are riding in the slipstream of
professional investors who anticipate slower economic growth in
the United States by lightening purchases of US securities,
which undermines demand for the dollar.
With markets expecting the Federal Reserve to cut interest
rates, investors are switching funds to countries with higher
returns: in Britain, the key rate is 5.75 percent so in turn,
demand for sterling adds to upward pressure on the pound.
—Reuter