In a speech yesterday, the monetary policy committee (MPC) member suggested that the rapid depreciation in the UK’s currency had been notably disappointing in services, where it was previously strong. He said: “Our market share, which had been rising strongly before the crisis has flattened off, rather than accelerating.”
Britain’s poor trade performance, despite a weakening of the pound in recent years, could be a sign that its exports are less price-sensitive than before and might not recover as expected, Bean said.
Despite this belief, the dramatic fall in sterling did little to alter the balance and improve the UK’s export position. Improvements in the UK’s net exports have only added 1.5 per cent to growth figures since the UK first entered recession.
Investment firm Pimco mirrored Bean’s comments on the lack of help provided by the falling value of the UK’s currency. Managing director Mike Amey said: “Net exports have persistently disappointed since sterling’s fall in 2008 and 2009.”
This March, current Bank governor Sir Mervyn King insisted that sterling is now priced correctly, having previously said that it would have to continue falling. Pimco also voiced fears that incoming governor Mark Carney would favour a further fall, boosted by increases in quantitative easing.