The Falling Pound: Good or Bad?

It is very good news for manufacturing and exports and business generally needs to be fleet of foot to take advantage the the opportunities which this presents. It is an open window which may close, so no delay. It provides scope for home production as imports will become more expensive. Since we import almost everything we use, that may stoke inflation. That in turn may provoke a rise in interest rates. Borrowing costs for the government may rise because of the general uncertainty as to where Britain is headed, in or out. If it is out that will trigger a further fall in the value of sterling. Suddenly the economy will be hit by a major rebalancing shock at the start of the summer holidays.

It is obviously bad news for holders of assets valued in pounds and very bad news if those assets have been used to secure loans in another currency such as US dollars.

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