Falling pound to `cushion` exporters |
The weakness in the pound will absorb some of the shock of the Brexit vote as it weighs on domestic business spending in the next few months, according to the Confederation of British Industry (CBI). The business group said the boost to exporters, whose goods will become relatively cheaper after the decline in sterling, could provide politicians some breathing space to ensure long-term global trade links are maintained. However, the weakness of the pound leaves manufacturers and other importers vulnerable to higher costs and inflation. Sterling has fallen more than 10pc to around $1.32 since the EU referendum result became clear on June 24. The CBI’s comments came as it reported “reasonably steady” economic activity among UK businesses heading into the referendum on June 23.Investment and hiring intentions will be affected by how long the current period of political uncertainty lasts, which highlights the need for clear signals that the UK is open for business.The latest growth survey from the CBI, carried out before the referendum, showed that manufacturers were reporting rising export orders, and retailers said the slowdown in consumer spending was starting to abate.
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