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So if the UK is still buying/importing more or less the same goods/service as it did a year ago - and paying up to 18% more for them - you would expect the balance of payments to actually worsen in the short and medium term. Ditto with UK exports, if exporters aren't passing on cost reductions enabled by devaluation or if overseas buyers aren't buying any more of them even if they are cheaper.
In the longer term, of course, you would expect UK exports to increase and imports to reduce, in volume if not in value terms (expressed in Euro). But that also assumes that British exporters are geared up to ramp up production in response to increased demand. Given "goods" as opposed to services are such a small proportion of overall exports, the effect could be quite marginal on the economy as a whole. It will take a very long time before any increase in goods exports makes up for the loss of services exports to the EU when UK institutions lose their passporting rights.
So years from now, "economists" will still be wondering why the UK economy responded so little and so slowly to the devaluation stimulus - much as they wonder now at the continued absence of inflation. None seem to think the UK class structure, the lack of governmental fiscal stimulus or the destruction of Trade Union bargaining power has any role in all of this. Of course we know better!
Index of Frank's Diaries
by Luis de Sousa - Nov 22 6 comments
by Frank Schnittger - Nov 19 48 comments
by Oui - Nov 20 8 comments
by gmoke - Nov 21 4 comments
by Frank Schnittger - Nov 7 89 comments
by Frank Schnittger - Oct 25 20 comments
by Cat - Nov 3 20 comments
by gmoke - Oct 31 5 comments
by Luis de Sousa - Nov 226 comments
by gmoke - Nov 214 comments
by Oui - Nov 208 comments
by Frank Schnittger - Nov 1948 comments
by Oui - Nov 161 comment
by Oui - Nov 162 comments
by Oui - Nov 89 comments
by Frank Schnittger - Nov 789 comments
by gmoke - Nov 6
by Cat - Nov 320 comments
by gmoke - Oct 315 comments
by Frank Schnittger - Oct 2817 comments
by Frank Schnittger - Oct 2520 comments
by Cat - Oct 2127 comments
by Frank Schnittger - Oct 1779 comments