UK manufacturing was slightly stronger in February, with growth of 0.8 per cent (an improvement of only 0.4 per cent was expected). Industrial output was up one per cent, higher than an anticipated increase of 0.3 per cent.
However a weak pound does not seem to be helping exports. The total trade deficit increased to £9.4bn. Our reporter Yogesh Chandarana on the effects of a depreciation in sterling:
The manufacturing data will concern Bank of England governor Sir Mervyn King, who recently argued that manufacturing exports would help to rebalance the UK’s economy, and improve the trade deficit. Many – including King – have argued that a weaker sterling was pivotal to this. But in reality, it has done little to help.
On a trade-weighted basis, sterling is now at similar levels to where it was after the UK was ejected from the European exchange rate mechanism in 1992. That particular devaluation did help exports, and the UK subsequently swung into a trade surplus.