Weaker Sterling Does Have An Upside
Posted by siteadmin on Wednesday 6th of September 2017.
Ever since the inflation that followed Prime Minister Harold Wilson’s claim that the 1967 devaluation would not affect the pound in their pocket, the British public has perceived a weakened currency as a bad thing. Agreed, it makes foreign holidays and many imports costlier, but it also has an upside.
Recent data has highlighted the way in which sterling’s loss of value against the euro, US dollar, etc. after last year’s Brexit vote helped some industries, especially those that export goods or services. Blue-chip companies with high overseas earnings nudged the FTSE100 up into the 7,000-7,500 range within six months of the referendum result.
The Food and Drink Federation (FDF) revealed in August that food and drink exports, at £10.2bn, were 8.5% higher in the first half of 2017 than in the same period last year. Farmed Scottish salmon was a particular success story, the FDF said, with exports up by over half. Salmon is second only to whisky in food and drink exports.
However, weaker sterling has brought no sustained boost to car manufacture; with many raw materials and parts imported, the benefit was muted. Its trade body reported first-half UK car production well down on 2016, though July saw a rise. Across UK industrial production, ONS data confirmed a 0.4% decline in Q2.
ONS figures were brighter on foreign visitors to the UK, whose euros and dollars buy more pounds to spend here. June visitor numbers were up 7% year-on-year, with those from North America one-third higher.
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