3/23/2017, 11:02 AM (Source: TeleTrader)
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Pound's drop drives export profits, for now: Broadbent

The impact of Brexit-related depreciation on import prices and household income in the United Kingdom may marginally prevail over benefits on the demand side, said Ben Broadbent, deputy governor of the Bank of England. In prepared remarks for his speech in London on Thursday, he said the situation in the financial markets mirrors the notion and reiterated global sentiment is "looking better than for some time."

"Despite higher profitability, business investment is projected to stagnate or fall this year even as it accelerates significantly further in other developed economies. The more negative effects on consumption clearly predominate and growth of aggregate demand is projected to slow reasonably sharply, to 1.2% by the end of this year," the member of the Monetary Policy Committee stated.

He explained the "sweet spot" for exporters from the decline in the pound after the European Union referendum in June may not last. In Broadbent's opinion, the possibility of a favorable Brexit deal with the administration in Brussels makes long-term investment risky as the currency may jump. Conversely, costs of exporting would increase with the severance of ties, he noted. 

Baha Breaking News (BBN) / IT