RE: Pound too Strong?
Friday 25th October 2002
Pound too Strong?
Economic reality of the global marketplace or time to join the Euro?
Discussion
Balls. The best measure of the strength of the pound is the Bank of England's trade weighted sterling exchange rate index. This measures the pound's strength against the currencies of the countries we trade with in proportion to the amount of trade we conduct with each country. It is designed precisely to measure the effect theis bloke is complaining about.
So does the index suggest the pound is strong? Nope. Its at a completely average level based on the last 5 years worth of data. It's also the same level it was at on average all through the 1980s.
There was a period of 4 or 5 years following our ejection from the european exchange rate mechanism when the pound's value was about 15 percent depressed.
But looking at the last 20 years, that period of depression was an anomaly, and the current level is average.
There is no point calling for the devaluation of the pound. (a) there is no evidence it is overvalued. (b) there are no sensible economic measures the government could take to weaken the pound. (c) we would need the agreement of our trading partners in advance, and they wouldn't give it.
When you are in Baunton's position you have a choice. You can either blame everyone else for the state of UK manufacturing, or you own up and admit it is your own fault for having shitey levels of productivity.
If you want a long term solution to long term economic problems, you have to tackle the source of those problems head on. Tinkering with short term measures, like forex levels and interest rates will achieve nothing more than undermining the stability of the economic environment and making it even harder to implement real reform.
So does the index suggest the pound is strong? Nope. Its at a completely average level based on the last 5 years worth of data. It's also the same level it was at on average all through the 1980s.
There was a period of 4 or 5 years following our ejection from the european exchange rate mechanism when the pound's value was about 15 percent depressed.
But looking at the last 20 years, that period of depression was an anomaly, and the current level is average.
There is no point calling for the devaluation of the pound. (a) there is no evidence it is overvalued. (b) there are no sensible economic measures the government could take to weaken the pound. (c) we would need the agreement of our trading partners in advance, and they wouldn't give it.
When you are in Baunton's position you have a choice. You can either blame everyone else for the state of UK manufacturing, or you own up and admit it is your own fault for having shitey levels of productivity.
If you want a long term solution to long term economic problems, you have to tackle the source of those problems head on. Tinkering with short term measures, like forex levels and interest rates will achieve nothing more than undermining the stability of the economic environment and making it even harder to implement real reform.
Other industries have had to streamline over the past 20 years just to stay in business, now its the motoring industries turn, 'Too bad for too long'! Bite the bullet, use your brain and your B****cks to put right what should of been done years ago! & Stop complaining. I know it seems to be fasionable at the moment to slate the USA, But we have a lot to learn! I know where i'd rather be! Talking about the fact laughing that your car struggles to get 7 mpg rather than trying to tell yourself its ok to drive around in a SMART because you get over 50 mpg! And its fun! They are, but i'd rather leave a pair of 25ft rubber scorch marks in the road than have traction control i can't turn off!
AFAIK all the strongset performing economies of the last 150 years have ridden hand in hand with having strong currencies. People have bought their goods because they are good.....strikes me the SMMT might want to look at the product before blaming their woes on currency fluctuations...
I always find it strange that manufacturing, probably one of the most immobile operations in the world can up sticks and move its entire operation by the end of the afternoon in response to exchange rate fluctuations.
Surely it costs millions to move, and lots of time and effort...basically its a poo-ey stick to try and scare our noble politicians isn't it?
Surely it costs millions to move, and lots of time and effort...basically its a poo-ey stick to try and scare our noble politicians isn't it?
You guys obviously aren't in manufacturing.
Trying to compete with foreign companies is almost impossible! I am specifically talking about the 1st in the line of manufactures, not say, Jaguar, but the small UK company that casts say cylinder heads, or a much less significant component, a bracket on a JCB etc... just a few thousand per year.
All the workers are on just over minimum wage, the place is run on a shoe string, evey cost save in in place. Yet orders get placed with companies in Poland or Turkey because they can offer the exact same part, fully machined and packaged, deliverd to the factory in the England for the cost of the rough casting in the UK!
Most manufactures in the UK have struggled through the last five years with no price rises, just deminishing profits - most are simply turning over by now! No one invests in an industry that has no margins, in fact some of best performing UK manufacturing are the companies that had the forsite to down size UK operations and source from the far east of eastern europe. GKN is a good example or this trend, much of their automotive parts are made in Mexico.
Believe me, if there are cost saves and productivity improvements, UK industry has them, any company that hasn't has already gone to the well!
Alastair
Trying to compete with foreign companies is almost impossible! I am specifically talking about the 1st in the line of manufactures, not say, Jaguar, but the small UK company that casts say cylinder heads, or a much less significant component, a bracket on a JCB etc... just a few thousand per year.
All the workers are on just over minimum wage, the place is run on a shoe string, evey cost save in in place. Yet orders get placed with companies in Poland or Turkey because they can offer the exact same part, fully machined and packaged, deliverd to the factory in the England for the cost of the rough casting in the UK!
Most manufactures in the UK have struggled through the last five years with no price rises, just deminishing profits - most are simply turning over by now! No one invests in an industry that has no margins, in fact some of best performing UK manufacturing are the companies that had the forsite to down size UK operations and source from the far east of eastern europe. GKN is a good example or this trend, much of their automotive parts are made in Mexico.
Believe me, if there are cost saves and productivity improvements, UK industry has them, any company that hasn't has already gone to the well!
Alastair
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