Changes in exchange rates have little impact on UK manufacturing exports and are likely to have only a modest effect in reducing the country’s record trade deficit, researchers at GEP — the Globalisation and Economic Policy Centre at The University of Nottingham — claimed today.
The researchers analysed exchange rate movements and export patterns of over 23,000 UK manufacturing firms over a 17-year period from 1987 to 2004 — the most comprehensive research of its kind carried out here.
In a paper to be presented at the Royal Economics Society Annual Conference next week, the GEP team say that changes in exchange rates have no impact on a manufacturer’s decision over whether to start — or stop — exporting.
Report co-author, Dr Richard Kneller, Associate Professor of Economics at The University of Nottingham, where GEP is based, said: “Our research shows that a drop in the value of the pound will not suddenly persuade British manufacturers to get out their foreign phrase books and start trying to sell overseas.“
He said the analysis also showed that changes in exchange rates make no difference to the level of exports of multi-nationals based in the UK.
Dr Kneller said: “It would appear that multi-nationals are better able to internalise and offset currency risks. In the last few years there has been a huge amount of foreign direct investment in the UK, which means that multi-nationals now account for at least a third of total UK exports.”
But the report shows that exchange rates do have some effect on individual domestic UK manufacturers. For every one per cent increase in an exchange rate index a firm’s exports will drop by 1.28 per cent. Usually exchange rate indices change by between three and 10 index points in a year.
But Dr Kneller said: “You have to put this into context — on average, exports account for just 5.6 per cent of a domestic UK manufacturers business — so, on average, a ten point change in the exchange rate index will make about half a per cent difference to total sales for a firm.
“The findings may surprise many people — intuitively you would expect a strong pound to be bad for exports and a weak pound to lead to much greater exports, but this research shows a different picture. It means those concerned about the size of the trade deficit should not see a devaluation of sterling as a magic bullet solution to closing the gap.”
Emma Thorne | alfa
Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik
Preferential trade agreements enhance global trade at the expense of its resilience
17.02.2017 | International Institute for Applied Systems Analysis (IIASA)
The Institute of Semiconductor Technology and the Institute of Physical and Theoretical Chemistry, both members of the Laboratory for Emerging Nanometrology (LENA), at Technische Universität Braunschweig are partners in a new European research project entitled ChipScope, which aims to develop a completely new and extremely small optical microscope capable of observing the interior of living cells in real time. A consortium of 7 partners from 5 countries will tackle this issue with very ambitious objectives during a four-year research program.
To demonstrate the usefulness of this new scientific tool, at the end of the project the developed chip-sized microscope will be used to observe in real-time...
Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.
The results will be published on March 22 in the journal „Astronomy & Astrophysics“.
Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...
Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.
Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...
In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...
Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.
Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...
20.03.2017 | Event News
14.03.2017 | Event News
07.03.2017 | Event News
28.03.2017 | Physics and Astronomy
28.03.2017 | Health and Medicine
28.03.2017 | Life Sciences