Performers at a leading UK cultural festival are so worried about the British pound falling over the next few weeks that they have asked for payment in dollars and euros.
Fergus Linehan, director of the Edinburgh International Festival, told CNN Business that many artists think the UK currency could weaken further ahead of the October 31 deadline for Brexit, eating into their earnings.
The pound last week slumped to its weakest level in more than two years as UK Prime Minister Boris Johnson doubled down on his threat to leave the European Union even without a deal in place to protect trade.
The Edinburgh festival decided last November to take out insurance against a weaker pound, buying euros and dollars when one pound purchased $1.30 instead of the current $1.22.
Though it had used currency hedges in the past, the festival decided to ramp up its dollar and euro purchases amid continuing uncertainty over the United Kingdom’s future trading relationship with its biggest export market.
The Los Angeles Philharmonic and Berlin’s Komische Oper have asked to be paid in dollars and euros, respectively. But it’s not just big names who are requesting payment in the world’s most widely held currencies.
“We are doing work with people from Lebanon to Shanghai — and they are also asking for tour fees to be confirmed in dollars or euros,” Linehan said. “It is much more pronounced now.”
The festival exchanged £1 million for dollars and euros in November, and will likely do so again next year, despite the costs and hassle.
“Hedging currency is expensive, but if we don’t do it, we can’t present as much work,” said Linehan. “We don’t know where we are going to be in one or two years. It’s creating anxiety.”
“We are coming up on three years of Brexit uncertainty — and when you are trying to plan with a long-range view, it makes planning extremely difficult,” he added.
Companies and business groups have urged the United Kingdom to end the confusion over its future trade ties with the European Union.
A major lobby group warned last month that a disorderly Brexit would disrupt almost every part of the UK economy, and French carmaker PSA (PUGOY) said new trade barriers could doom its factory near Liverpool.
A falling pound is bad for the United Kingdom since most of the goods it buys from abroad are priced in dollars or euros. But it makes the country more attractive for tourists with foreign currency to spend.
The Edinburgh international Festival takes place every August, bringing artists from the worlds of dance, opera, music and theater to the Scottish capital for three weeks.
– Julia Horowitz contributed reporting.