No magic bullet

According to a paper, changes in exchange rates have little impact on UK manufacturing exports and are likely to have only a modest effect in reducing the country's record trade deficit.

Authors of the paper, researchers at the Globalisation and Economic Policy Centre (GEP) at The University of Nottingham analysed exchange rate movements and export patterns of over 23,000 UK manufacturing firms over a 17-year period from 1987 to 2004.

In a paper to be presented at the Royal Economics Society Annual Conference the GEP team said that changes in exchange rates have no impact on a manufacturer's decision over whether to start — or stop — exporting.

Report co-author, Dr Richard Kneller, Associate Professor of Economics at The University of Nottingham, said: ‘Our research shows that a drop in the value of the pound will not suddenly persuade British manufacturers to get out their foreign phrase books and start trying to sell overseas.’