While the British Pound Sterling dramatic fall has been cause for ongoing reports of doom and gloom, it has also provided a boost for exports and a helping hand for the UK’s international manufacturing business. There are two sides to every story; you simply cannot view all the different economic figures in isolation. David Johnson, Director at Halo Financial, takes a look at the bigger picture:
“There is a cause and effect question here; and I haven’t found an answer to the direction of that yet. Undoubtedly, a fall in the value of the Pound makes UK goods more attractive to overseas buyers. That effect may be delayed somewhat while forward foreign exchange contracts are used up and contracts for goods and services are renewed. But the strength of the manufacturing industry in the UK has been showing signs of a rebound since the sharp dip in July 2016 and is back to levels last seen in 2014.”
“So, the Brexit effect was almost over and done within a couple of months, as the weaker pound kicked in and the manufacturing sector saw the opportunity. More importantly, the service sector, which also exports some of its services, is back up to 2015 levels and is threatening to break a down trend that has constrained this sector since late 2013.”
“UK GDP is back to 2014 levels and is on the rise, with all forecasters providing upward adjustments as the UK proves to be more resilient than anyone had predicted pre-referendum. Add to this figure the fact that UK unemployment is at the lowest it has been since before the 2007 economic crisis and you get quite a rosy picture of the UK. So isolating the manufacturing data and assuming the currency movement is the key is, I think quite blinkered.”
Halo Financial has created an infographic with the key figures from the latest manufacturing sector survey, considering how the industry can move forward in times of currency volatility.