There were plenty of lies circulating before the EU referendum, but the biggest porky doing the rounds in the new Brexit reality is that the collapse of Sterling is really quite a good thing, as it will boost Britain’s exports.
Last week the Economist pointed out that there is in fact no evidence from recent times that the UK’s exports get any sort of leg up from a devaluation in Sterling. If we were largely in the business of pushing commodities out into the global market like say Chile, the Pound’s tribulations might have a silver lining of sorts, but most of what we sell abroad has been made with stuff we have earlier had to buy from Johnny foreigner.
More expensive Marmite may soon by the least of Britons’ gripes. BA for example appears to base many of its fares on the dollar. Right now the basic economy ticket between Gatwick and Cancún costs more than $1000 which, given the Brexit exchange rates and the fact that this has always been the discount route between Europe and Central America, probably means there will be fewer Brits soaking up the rays on the Mayan Riviera this winter. (The peso will probably also attempt to rise from the ashes on firm news of Trump’s demise.)
British equities look cheap, but foreign investors probably fear a further devaluation that will make them even cheaper. Many will already have been burned by the fall since June which has made the concurrent surge in the value of the FTSE index largely meaningless.