Policymaker questions the current level of sterling for exports

Asked in a TV interview whether he would favour a weaker level for sterling to help exports, Mr McCafferty said there “are questions on whether sterling is now at a competitive level in terms of allowing that fundamental rebalancing”.

But he said sterling’s level alone was not the sole factor behind Britain’s relatively weak export performance.

“My impression is the lack of export performance is as much due to lack of demand in our major markets and the fact that our main exports are oriented at relatively slow-growing markets at the moment,” he said. Tom Vosa, chief economist at Yorkshire Bank, described the recent improvement in Yorkshire’s export performance as “a dead cat bounce”.

Mr McCafferty also said the Bank of England should explore policy alternatives to quantitative easing and its Funding for Lending Scheme if needed, but played down a nominal gross domestic product target.

“It’s of use in very unusual circumstances,” Mr McCafferty said.

“I don’t think nominal GDP targeting is a better signal than other methods, and I think there are distinct problems with it, certainly in terms of measure- ment.”

The former CBI economist said firms have been reluctant to lose experienced workers during the downturn as they are hard to replace.