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The elusive export boom: Britain

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Sterling’s 15% depreciation since the Brexit vote in June would—many hoped—bring a big improvement in the balance of trade. Britain has run a trade deficit for most of the postwar period; it was last in surplus in 1997. Alas, figures out today are expected to show that the deficit in December was about as large as it was for the rest of 2016. Export volumes have barely budged since the vote, suggesting that British exporters are not exploiting the pound’s weakness to expand into new markets; instead they are simply letting sterling prices rise slightly and booking bigger profits. Consumers, meanwhile, are not yet cutting back on imports, even though they have become costlier: spending on foreign holidays, for instance, is holding up. Hopes that the weak pound would help to rebalance the economy towards an export-oriented model are, for now, proving empty.


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