Deputy Governor’s warning over exports

The UK may be struggling to rebalance its economy towards exports because of poor demand for the services it specialises in, a senior Bank of England official said yesterday.

Charles Bean, deputy governor for monetary policy, told the Official Monetary and Financial Institutions Forum that the UK’s export performance in the years since a financial crisis tipped the world into recession in 2008 has been “ distinctly underwhelming”.

Net exports, or exports less imports, have added just 1.5 percentage points to economic growth since the start of the recession, he said, despite a plunge in the value of sterling, which should make British goods and services more competitive on international markets.

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“That is not simply a reflection of the weakness in our export markets, as the weakness at home has depressed imports correspondingly. Once one controls for the changes in activity at home and abroad, net exports still look weak,” Mr. Bean said.

He said the “real disappointment” has been exports of services, particularly in exports of the financial services Britain has long had an advantage in.

There is a “possibility that the demand for, and supply of, exports have become less responsive to relative price signals, perhaps reflecting the nature of the goods and services we have a comparative advantage in,” Mr Bean said.

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