The Pound has fallen by approximately 17% against the Dollar from the eve of the referendum to date. The upside of this fact for the UK economy is that exported goods (and services) paid for in Sterling are now substantially cheaper in importing markets than before the vote, giving them a clear financial advantages over competitors with stable currencies. This particular silver-lining can be seen in the latest set of UK manufacturing export data.
A CBI Industrial Trends Survey has identified that export volumes picked up to their best level for thirty months in the period between July and the end of September. It predicts that growth will continue for the next three month period (at least), but that the availability of skilled labour may be a limiting factor as a quarter of the 459 companies surveyed highlighted this as a risk.
Rain Newton-Smith, the CBI’s chief accountant noted: "Manufacturers are optimistic about export prospects and export orders are growing, following the fall in sterling. However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead. Access to skills clearly remains a high priority, so manufacturers will be looking to the government to implement a new migration system that meets the needs of business while responding to clearly-stated public concerns. Maintaining a preferential route between the UK and the EU, our largest trading partner, will be important".
Of course, these comments don’t jibe with the “Brexit means Brexit” statements of the PM nor her inference that the UK wishes to control immigration which must be at the expense of membership of the single market.
The obvious cloud to accompany the silver-lining is that the cost of imported raw materials has also risen significantly, with unit costs pushed up at the fastest pace for three years, a trend which will continue for at least three months as it lags the economic cycle (and the depreciation of Sterling, in this case). The weaker Pound is already causing a rise in the consumer price index, eroding the spending power of the public.