Tuesday, 21 April 2009

Signs that weaker pound is having an impact

The following two items suggest that the falling value of the pound is starting to have an impact on exports and imports. The Guardian reports that there has been a big jump in exports on the back of the weaker pound which has triggered a sharp drop in Britain's trade deficit with countries outside the European Union, while there are signs that cost pressures in industry are easing, suggesting some relief for hard-pressed manufacturers. Exports soared by 12.8% while imports dropped 5.4%. The overall trade in goods deficit shrank to £7.3bn from £7.8bn. Link to article.
BBC news reports that many tourist attractions in the UK have seen an increase in visitors over the Easter period, both from within the UK and from abroad. Link to video

Will a weaker pound always have a positive impact on the trade deficit? What factors will determine whether the UK benefits or not?