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No! It's like saying a vendor who loses money on an item (because the sale price is less than the manufacturing cost) might remedy the problem by reducing both
by mrb 10y ago
No! It's like saying a vendor who loses money on an item (because the sale price is less than the manufacturing cost) might remedy the problem by reducing both the price and the cost by 10% each. It won't help.
If the pound loses 10% of its value, the UK would be able to export 10% more (so 47.2 billion USD more) to its trading partners (at the same real cost to them.) However it would cause its imports to cost an extra 66.3 billion USD. And 47.2 - 66.3 = -19.1 meaning the UK would lose (increase its trade deficit by) 19.1 billion USD per year.
- bpodgursky 10y agoNo, this ignores the competitive advantage being 10% cheaper brings. Being cheaper than your competitor expands your market.
- mrb 10y agoI don't ignore it. My argument assumes that a 10% cheaper price expands the market by 10%. (However I recognize this is a simplification. In the real world the market may expand by, say, 5 or 15%.)