Tag Archives: depreciation

Greedy UK exporters are jeopardising our prosperity with exchange rate profiteering

Theresa May with Japan’s prime minister, Shinzo Abe, in August. Japan has promised to sign a trade deal with the UK as soon as possible after Brexit – probably because the stupidity of UK exporters means it will be easier to sell Japanese goods here [Image: Kazuhiro Nogi/Reuters].

This is a perfect illustration of everything that’s wrong with British business today.

The fall in sterling, after the EU referendum result in favour of Brexit, created an opportunity for UK exporters. It meant they could sell their products abroad more cheaply.

This would have made our exports more desirable, meaning (hopefully) that more foreign clients would buy them.

But exporters decided to push their prices up instead, making our products less desirable (although extorting more money from clients who were already contracted to buy from them).

Meanwhile, the depreciation in the value of the Pound meant imports became more expensive, squeezing UK citizens’ ability to buy and fuelling the recent rises in inflation.

The result: More poverty for the many, while a few business bosses made a short-term profit that they didn’t even share with the workers who actually created it for them by manufacturing the goods.

Britain’s manufacturing exporters have “hoarded” the gains from last year’s fall in sterling by putting up prices rather than increasing output and sales.

The Office for National Statistics said exporters could have allowed their prices to decline in line with the fall in the pound, making their products more attractive to foreign buyers, but chose to boost their profits instead.

Illustrating the uncertainty following the Brexit vote, which has made exporters nervous about expanding production, analysis by the ONS shows that UK companies increased export prices by 12.7% year on year in the months after the referendum in response to a 16.9% fall in the exchange rate.

Source: UK exporters have ‘hoarded’ gains from fall in sterling, says ONS | Business | The Guardian

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