Apple was forced to have developers increase the price of their published apps by 25 percent in less than a week.
This will have an effect on movies, apps, music, books, and anything that can be found in Apple’s App Store. The main reason for this variation would be Britain leaving the European Union, as the process is expected to take place starting in March 2017. The decision would put theU.S. and UK apps at a match, where a $9.99 app in the U.S. would cost £9.99 in the UK.
Preparing for price imbalances
Every purchase performed through Apple’s App Store will see its transaction cost increased, including those within an app. This would also apply to, for example, Super Mario Run, as the cost of unlocking every single world would be £9.99.
On the other hand, the increase would also apply to Turkey, Russia, India, and Romania, but in different rates. For example, a 2.69 lira app in Turkey would then cost 3.49, an increase of 38 percent.
The full list of upcoming price changes can be seen here.
“Price tiers on the App Store are set internationally on the basis of several factors, including currency exchange rates, business practices, taxes, and the cost of doing business. These factors vary from region to region and over time.”
A period of economic uncertainty for the UK
This comes due to changes in the price of currencies, mainly because the United Kingdom will be leaving the European Union, forcing it to rely on its pound sterling rather than enjoy the euro as a potentially secure multinational currency.
Just after Brexit passed, the pound fell against most major currencies, particularly the dollar. This allowed American businesses to score good deals in the UK. Financial security exited the UK and investors chose to keep their money out of a potentially catastrophic situation.
Whenever a country undergoes an important change in politics, the value of its currency against others shows how riskful that situation is perceived. The pound fell to a 31-year low, equivalent to a 10 percent drop just after the vote to leave the EU passed. This does not mean that Brexit will sink the UK in a financial crisis, but rather, it is an obvious move by businesspeople and organizations with large assets, who prefer to maintain their money out of a place that is perceived as economically and politically unstable.
Analysts suggest that UK’s economy will grow slower outside the EU rather than inside, but by staying as a separate entity, the United Kingdom will enjoy fewer restrictions in trade allegiances and migration policies. Reportedly, the Bank of England is prepared to provide £250 billion to support the markets in the short term.
The problem lies in the first years after leaving the EU, where financial security is scarce for people that operate using the pound sterling.
A similar case could be Trump’s victory in the United States. On Monday after the election, the U.S. dollar hit an 11-month peak, while the Mexican peso dropped.
One of the most vital concepts in currency exchange is perceiving trends and analyzing how economies force each currency to change its value. When Trump won, investors jumped on the bandwagon to buy U.S. dollars, in the expectation of a “debt-fueled U.S. fiscal binge that will push up inflation,” according to Ned Rumpletin, the Head of Currency Strategy for TD Securities.
When there is a general perception of how a country’s economy will change, such as in a presidential election where the candidates publicly expose their plans for the economy, or in a referendum such as Brexit where the implications would be vast and binding for the whole country, trends start to surface. What business owners and banks try to do is lose as little money as possible. For example, if Bank A had most of its assets in U.S. dollars, then it would want to change them into Japanese yens or Australian dollars if an American president-elect promised to decrease interest rates, which almost certainly decreases the value of the official currency, as it allows people to buy more things without having to pay for them immediately.
Currently, politicians in the UK are struggling to determine where the power resides to put Brexit in motion, but there seems to be an agreement that the referendum has passed and the UK will no longer be a part of the EU, no matter what.
According to Attorney General Jeremy Wright, the referendum was carried out “with the universal expectation that the government would implement the result,” according to The Week.
Prime Minister Theresa May has assured that Article 50 will be put into motion no later than March 2017. The process is expected to be completed over the course of two years, although some politicians believe that it may be longer due to burdens and resistance from opposing parties.