It is very hard to understand why anyone ever thought it a good idea to make the Foreign Office take its own foreign exchange risks on their £830m core budget – a minuscule amount in the context of the sums traded on foreign exchanges each day, but needing complex operations given the number of different currencies involved in virtually every country in the world. This just guarantees greater variability & therefore unpredictability in the best way to hedge ones bets. Surely best left to the experts in the Treasury?
And even if the Foreign Office had its own experts, or were allowed to contract with outsiders, would they be permitted to proceed on the basis of a different view of prospects for the British economy than that of Her Majesty’s Treasury? If not, it’s just a double whammy the diplomats have fallen for.
The sudden & sometimes arbitrary cutbacks which now have to be made will have long lasting & incalculable effects. Not least because of the reported cuts affecting locally recruited staff. Each person who loses their job or has to accept reduced hours will have a network of family, friends, acquaintances & neighbours who will be dismayed by the lack of loyalty to their servants displayed by Her Majesty’s Government.
And I wonder if this might be an unlooked for consequence of the Bank of England’s decision to withdraw from the provision of retail banking & clearing services to government departments.
Links
How the Treasury hoodwinked the Foreign Office
Embassies forced to cut back as budget crisis hits Foreign Office
How the Treasury hoodwinked the Foreign Office
Embassies forced to cut back as budget crisis hits Foreign Office
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