Growth & Jobs | Be frugal with your money from the UK this Christmas
Consumers who depend on remittances, especially from the United Kingdom (UK), may be receiving less than they did last Christmas, and are therefore being urged to be spend more cautiously.
Horace Hines, general manager of JN Money Services, owners and operators of JN Money, which manages the greatest share of remittance inflows from UK to Jamaica, noted that many persons in the UK have become “marginally poorer” due to increases in basic food items and fuel, and, therefore, may have less disposable income to remit.
He explained that a mix of these factors may be contributing to lower-than-normal remittance inflows from the UK.
Data from the Bank of Jamaica show that for the January to October 2022 period, remittance inflows from the UK decreased nearly 30 per cent (29.56 per cent), or approximately US$92 million, when compared to the same period last year.
Hines said the UK has moved down from being the second-highest source of remittances to Jamaica up to March of this year to third place, behind Canada.
He added that the depreciation in the value of the English currency- the pound- may also result in Jamaicans receiving less than they would normally collect from the UK at this time of year.
“For example, if they normally send £100, which would be about $20,000, then it may be about $17,000 now, which means that even though they may continue sending the same pound value, the receiver in Jamaica would end up getting less,” he explained.
Keenan Falconer, an economist with the UN Jamaican Economy Panel, an initiative of the UN Resident Coordinator’s Office, agreed that the depreciation of the pound may result in Jamaicans receiving less than they are accustomed to at this time of year, even if they are receiving the same value they normally would in UK currency. The pound sterling has been progressively depreciating since January, moving from its highest of US$1= £0.7293 at the start of the year, to its lowest of US$1= £0.9348 in September, according to exchangerates.org, a UK site which provides up-to-date statistics on exchange rates and historical data. The pound sterling has since rebounded to US$1= £0.8157 as of December 1.
An optimistic Falconer reasoned that while some persons in the UK are experiencing a reduction in their spending power that could affect what they can afford to remit, he believes remittances on a whole to Jamaica will remain buoyant.
“Despite the economic pressures, persons might shift their consumption a bit to send what they would normally send. The difference is usually marginal, so, for example, if they used to send the equivalent of US$200, they might send US$180 or US$150, but the frequency of remittance transactions during specific periods tend to go up even if the nominal figure is marginally higher or lower,” he pointed out.
He underscored that historically, despite what may be happening in developed countries economically, remittance inflows during particular periods of the year, such as Christmas, back-to-school preparation and Easter, normally remain elevated, compared to the rest of the year.
“Typically, despite whatever economic downturns or crises are happening in places like the UK, US and Canada, you don’t usually see that adversely affecting the level of remittances that might be sent to Jamaica. Historically, the Jamaican community in the diaspora tends to send remittances because of altruistic motives, as they are aware of the economic conditions in Jamaica,” he said.
Despite the challenges in the UK, Hines remains positive about the outlook for Britain.
“With a new government in place and a change in the financial policy, we have already started to see some rebound in the pound. There is also a new wave of migrants going to the UK, such as nurses and teachers, who will add to the cohort of customers who will be supporting friends and families back home,” he said.
However, he is encouraging persons who normally receive remittances from the UK at this time of the year to be mindful of their spending, so that they can receive more value for their money.
“Take care of the more important and basic needs first, such as food, light and medical bills, before making other expenditure such as on entertainment or gifts, because you may get 100 pounds, but it would not have the same value as it had last year,” he recommended.