UK MoD Exchange Rate Hole
 

Today's "Times":-
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The MoD faces a multi-billion pound hole due to post Brexit exchange rates.

The NAO warns that the £ 82 Bn 10 years modernisation plan includes £ 18.6 Bn in dollars and Euro 2.6Bn all set at pre-referendum rates of exchange and "poses a significant risk to the plans affordability" If the pound stays were it is right now there is a £ 3Bn hole.

The MoD also requires a further £ 6 Bn saving after the £ 24.4 Bn of extra commitments announced in 22015 which will absord ALL the £ 10.7 Bn "headroom" built into the original plan.
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Looks like more cuts coming guys.......

Any rumours of redundancies............?

And so many folk on here are always whittering on about "why don't we just buy American..."

You reap what you sow.

No need to worry about all those extra Bns of $$$$$ we need to pay America; since Mother Theresa's meeting with Trump that will all be waived in the spirit of the special relationship won't it.... er won't it.

What is worrying is that we've already run out of the contingency on current plans - that sort of explains why the frigate order keeps moving right

I wouldn't be surprised to see the P-8 suffer the same fate.................

Planning ahead? ;)

We will be past the point of only having one aircarft (as per Moses Law) by then Nut.........

Bu there will still be a raft of committees in existance............

That's why, when most competent organisations plan to buy foreign goods and services, they hedge the currency. There is no excuse for failing to manage Forex risk.

except we 'd get headlines such as

"MoD pours millions into pockets of May's Cronies in City"

The problem is simple, mod had contingency funds for procurement and some exchange rate variation. Where it (and many other organisations) have been hit is an in year 20% (ish) collapse in the exchange rate - thats a fairly hefty sum to absorb. But of course far easier to write about bungling officials etc...

Agreed -

when you think Harold Wilson was mocked for devaluing the currency by only 14% you have to suspect it will catch up with this lot sooner or later

Some (most?) of these procurement programs, such as F-35/JSF, run over many years. Presumably we don't pay all the costs up front, but in a series of payments, so do not exchange rate fluctuations effect costs throughout the life of the program, and who is to say that the exchange rate might not be more beneficial in a year or so, saving us money?

Correct Biggus, we were in a worse position during the banking crisis in 2007.

Problem is that people have to make forecasts - if the rate is bad now any future expenditure looks difficult......

I've never heard of the Treasury saying "don't worry Minister, the Bank's Exchange rate Forecast for 2020 is fine so we can go ahead and spend..." - its CUT!! CUT!!! CUT!!!!

Today the Single Source Regulations Office aims to tighten up control of the arms budget. Foreign military sales are exempt but they want to know if they should examine FMS too.

Now remind me how we got Herc and F4 and and C17 - good and Nimrod 3/4 rather than E3 and P8.

Would F15 been better than GR1/4 or F14 than the F3?

The banking crisis was an event, leaving the EU is a permanent state. Unless we stay in the Single Market the Pound has found its new level.

if we're lucky........................

Just divert some of the £350 million a week promised to the NHS by Gove, Bojo and Farridge - problem solved. Better add a bit to compensate for rising oil prices too :hmm:

That seems to have disapeared... funny that.........

350M
 

HH
But we haven't left the EU yet.

Batco
PS; Re the 350M, I'm not holding my breath on that.