At the time of writing (10 May 2018 – 12:14 pm) the Bank of England announced that it will hold the base interest rate at 0.5% in a 7-2 vote. Only a few financial broadcasters and pundits predicted a rise of 0.25% but the UK’s cooling inflation picture did not correlate with such a move.
With news of the rate hold the rates and fx market flat-lined prior to trading in the US which could mean that fx traders will wait to see how much further the pound will fall against the dollar on the day before scooping up cheap pounds hoping for a rise in the GBP-USD to $1.40 to the pound.
How does this help or hinder studios and producers who want to make movies in the UK?
In the next few months, there will be a cheaper pound. Studios and producers will have a small window to secure talent and facilities at a much cheaper price than by this time next year so even if you will not be on UK soil to film your next blockbuster until then if the expected rate rise happens in the next 14 months the fx market will be such that it will be almost impossible to get a cheaper pound. With the uncertainty of what Britain will look like once we leave the EU (this is dependent on any possible trade agreement) a panicked and random FX market could spoil any plans of making a saving in the UK whilst taking advantage of the UK technical and creative talent pool.
My recommendation. Spend the rest of the day tweaking and re-planning your spending again (yes, those film business plans you have may now hold even more savings) and resubmit your projects. What may not have looked like good business sense now could work well as a profit-making project. The UK now has a cheaper lending rate still so even holding on to money from investors or loans for at least the next 6 months could be cheaper than waiting to decide to secure your facilities and talent later.
With the BREXIT picture still uncertain I still feel that there are opportunities for braver investors to make great savings on making movies and television in the UK but this is a limited offer and after August of this year, if no trade agreement is more formed with the EU then any savings that could be made will be lost in my opinion.
To simplify the matter, a 0.25% saving on £30 million is still a lot of money that can be used elsewhere. I understand it is not a simple as that but with the changes in the fx rate today it could be that amount, if not more.