Sterling depreciation & the UK trade balance

We’re pleased to announce that the highly anticipated second British Political Economy Brief in the series has now been published.

The paper No.2. Sterling depreciation & the UK trade balance, by Craig Berry and Scott Lavery, considers the relationship between the relative value of sterling and the UK trade balance.

When a country’s currency depreciates in value relative to its major competitors, its exports become cheaper (and imports become more expensive); the depreciation of sterling experienced in the wake of the financial crisis should therefore have boosted policy-makers’ efforts to rebalance the economy towards exports and away from the domestic consumption of imported goods – as occurred following depreciation in the 1970s and early 1990s. However, the brief highlights that there is no evidence of an improved trade balance following the recent depreciation of sterling, suggesting significant imbalances in the UK economy.

The brief has been covered by several news sources already including the Sunday Herald in Scotland, International Business Times and Yorkshire Post.

You can download the brief in full, free, below or read today’s SPERI Comment blog summarising the brief by Craig Berry and Scott Lavery.

SPERI British Political Economy Brief No.2 – Sterling depreciation & the UK trade balance (PDF 346KB)