ORGANIZERS of Edinburgh’s performing arts festival took hedges on the pound earlier this year in order to sign up international artists amid Brexit-induced currency volatility.
Managers hedged most of their currency dealings between six and eight months ago, shielding the festival’s budget from sterling swings, director Fergus Linehan said in an interview with the Financial Times. The three-week event features theater, dance and musical events with performers from 41 countries, from Russia to Nigeria.
“No one wants to do deals in sterling any more,” Linehan said. “So you’ve got to do all the arrangements in dollars and euros.”
The arrangements highlight how sterling’s volatility is affecting economic activity across the UK there may be further weakness if Prime Minister Boris Johnson takes the country closer to leaving the European Union without a deal.
The pound lost almost 6.5% against the dollar in the last 12 months, and more than 2.5% since Johnson became leader on July 24, putting at risk the purchasing power of the festival organizers. Last year, their budget was £13 million ($16 million), according to the Financial Times.
“Our buying power is down” with the pound at these levels, Linehan said. “Obviously our currency being in the toilet doesn’t help.”
Uncertainty over Brexit is also triggering a paralysis in long-term planning with some of the Edinburgh Festival’s partners, Linehan said.
“No one wants to say ‘OK, in five years’ time this is what we are going to do’ because there are so many variables that haven’t been really established yet,” he said. — Bloomberg