Will pound’s decline impact UK cleantech?
Published Tuesday, 27th January 2009
Will the declining value of the British pound (though it’s been on the uptick today) impact cleantech spending in the UK? We don’t have access to a working crystal ball (does anyone?), but we’ll offer a few thoughts:
- While it broke all records last year, cleantech investing is down globally so far this year. Cleantechnica reports that IPOs are at a dead halt for the first quarter, but that one expert predicts life to return to the market by the third quarter of 2009. So the problem clearly isn’t just the UK’s; it’s global. (See the Financial Times’ economic weather map.)
- Still, musings like these — “Is the British Pound on the Path to Collapse?” — don’t inspire much confidence. You’ll notice there’s not been much cleantech news out of Reykjavik lately, though the UK’s no Iceland yet (knock wood).
- On the other hand, soft pound + stronger dollar = more incentive for US companies to spend in the UK. Product Design and Development notes, for example, “The current value of the British pound allows US buyers of British software to take advantage of a favorable strong dollar/weak pound exchange rate that could produce savings of around 20 percent on their purchases.” While spending like that isn’t outright investment in UK cleantech development, it does keep the currency flowing.
- Beware, though, of self-fulfilling prophecies. When guys like Jim Rogers declare the pound is “finished,” some investors might think twice before looking to the UK for opportunities … no matter how much Gordon Brown grouses about “speculators.” Masdar, for instance, recently seemed to develop some buyer’s remorse over the proposed London Array wind energy project, and it’s possible others might also start coming down with cold feet.
Will today’s boost in the pound’s value mark a bottom reached and brighter financial skies ahead? What do you think? Let us know!
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Fundamental shifts in awareness and policy have taken place over the past 18 months and we are definitely moving from an era of “good intentions” to one of “good activities” in the area of energy and carbon footprint reduction. The recession has also furthered the need for sustainable business practices. As more and more companies look closely at their energy use and ways of managing it, new innovations will be brought to market and the investors will follow suit. A weak pound may detract some investors but there will be equally as many wanting to take advantage of a lower currency value for when the markets recover.
Additionally, legislation and policy such as the UK’s Carbon Reduction Commitment (CRC), is creating an artificial stimulus for the UK clean tech market. Companies are increasingly having to modify their processes, systems and behaviours in order to ensure compliance. Many companies are taking the initiative to do this right now. Rather like a racing yacht adjusting it’s sails, if you are going to modify your systems, better to do it whilst customer demand is weak than when you are running flat out.
Lastly, I am seeing a number of weak indications of a phenomenon that I coined “Conscientious Capitalism” at a recent event ie. a tempered form of capitalism where financial, citizenship and environmental stewardship could all be benchmarks of success.
These shifts will, I believe, continue to provide a fertile, if dampened market for clean tech throughout the recession and accelerate it in the longer term.