…Pound tumbles to N2,070/£1 as families brace for tighter spending
By Chinwendu Obienyi
Nigeria may see a slowdown in remittance inflows from the United Kingdom as its borrowing costs have climbed to their highest level in nearly three decades, while the pound has suffered its sharpest one-day drop in almost three months.
This represents a double blow that could reshape the financial lives of millions, including Nigerians living in the United Kingdom.
The yield or interest rate on 30-year UK government debt hit 5.680 per cent yesterday morning, which represents the highest level since 1998, indicating that it will cost the UK more to borrow from markets above the previous 27 year high of 5.649 per cent set in April.
Yields, which rise when a bond’s price falls, are a measure of the interest rate that investors demand when lending to a government or company.
The surge in yields on government bonds, which serve as a benchmark for everything from mortgages to personal loans, reflects investors’ expectations that the Bank of England will keep interest rates elevated for longer in its fight against stubborn inflation.
At the same time, the pound has suffered its steepest one-day fall in nearly three months, sliding to about N2,070/£1 in the parallel market from N2,075/£1 recorded on Monday.
For the Nigerian community in Britain, which represents one of the largest African diaspora groups, the developments are translating into immediate financial strain. Head of Research at FSL Securities, Chiazor Victor, said, “In the last two years, I learnt that mortgage repayments, personal loans, and even car financing have become significantly more expensive. Thus, Nigerian households will now be forced to rethink their spending, and that includes the money they send back home.”
Variable-rate mortgage holders are seeing monthly payments climb sharply, while new borrowers face higher entry costs. Students are also under pressure, with those relying on loans or family support having to navigate rising living costs against weaker currency strength.
He also explained that remittances might suffer a bit adding that remittances are a crucial source of foreign exchange for Nigeria, with inflows estimated at $19.5 billion in 2023, according to World Bank data.
According to him, the U.K. ranks among the top three remittance corridors for Nigeria, alongside the United States and Canada.
But with the pound’s weakness reducing the value of money sent home, he warned of potential declines in remittance volumes. For example, a £100 transfer now converts into fewer naira than it did earlier this year, diminishing its impact on households in Lagos, Abuja, or Port Harcourt who rely on such inflows.
“Even if people continue sending money, the naira equivalent is shrinking. The macroeconomic effect could be lower remittance-driven consumption in Nigeria”, Chiazor stated.
In Britain, inflationary pressures remain stubborn. Rent, food, and childcare costs are still elevated, and higher interest rates are dampening consumer confidence. Nigerian entrepreneurs running shops, restaurants, or professional services in cities like London, Birmingham, Preston and Manchester face rising business costs just as customers are tightening their wallets.
With U.K. financial conditions tightening and the pound under pressure, Nigerians at home should brace for more volatile remittance flows in the months ahead. Policymakers who are already grappling with foreign exchange shortages, may see further strain if diaspora inflows soften.
“The remittance pipeline might not dry up, but its strength is at risk. For families in Nigeria, every pound now delivers less relief than before”, Chiazor said.
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