Thread by @VFritzNews

Not sure on #Sterling story? Here goes.

*deep breath. You’ve got this, folks.*

When £ is weak, it’s more expensive to buy things from abroad, or things priced in dollars, like oil (diesel/petrol). At some point, higher costs are passed on to consumers.

Also many industries HAVE to buy from abroad but sell in £. Supermarkets & clothes retailers, for example. Even agriculture buys fertiliser. So a weak £ is a doubly inflationary hit. It hits our confidence too. Meaning demand for new things or services can fall.

Smaller, UK focussed businesses suffer more than eg international big business because their revenues are more likely to be in £s.

Obviously if you’re going on hols or a Brit living abroad but being paid in £, whether in salary or pension, your purchasing power goes down.

You could say all this makes British exports much more attractive.

Yes, to a point.

Hardly anything we make is with 100% UK raw materials & UK sourced components, energy & labour. Supply chains are generally global. Competitors are global. Consumers are global. There’s choice

Without landing any gamechanging free trade deals to offset losing access to the single market, finding places for British goods is more challenging. 42% still goes to the EU. But it’s become more expensive for UK business. Remember too, that Britain runs a trade deficit.

We import way more than export. Thus the net effect of a weak £ is inflationary. And a particular worry for pensioners & those working in the public sector.

However, Britain is exceptionally good at the high value stuff. Services. Banking, law, tech, science, creativity.

We’re also historically v friendly to international investors looking to park cash. Mega mansions & office blocks now look cheap. There’s also a goodwill aspect. The big question now is whether Britain will continue to attract the foreign capital it needs to offset its deficits.

If it can’t, the £ would need to weaken a lot more to close the gap in its external accounts. For now, the UK can borrow. These weren’t options available to eg Sri Lanka or Argentina in the recent past.

But borrowing on this scale when the cost of debt is only going up raises plenty of issues - practical as well as ethical - not least about where this leaves Britain for the generations that will one day pick up the tab.

A LOT for a Monday morning.

Have a biscuit.