With the Chancellor’s Autumn Statement, the exchange rate of the pound is once again being used by Brexit-deniers as a bogie man to frighten us.
I believe that the makers of Marmite and Toblerone, far from being worried by the value of the pound, are simply businesses seeing an opportunity to increase profits. Chocolate is particularly volatile as production is weather dependent, as are, apparently, exchange rates.
JusRoll decided to move its factory from Berwick to Greece because labour costs are far cheaper there. The exchange rate of the pound doesn’t even get a look in.
Let me explain. The pound fell off a far worse cliff in 2008 than it did post-referendum. Did the price of almond-laced chocolate or opinion-splitting, beef-based spreads jump in 2008? Of course not. So why now?
The pound is currently trading above its five-year average until the end of 2013. It jumped after the Greek bailout crisis as traders thought that contagion might spread to other Eurozone countries and gradually settled back down to the 1.15-1.20 euros range pre Greek bailout as deals were done.
The pound jumped as speculators sought a safe haven for their cash. The precious little darlings were frightened after the referendum and forgot all about Greece and its economy.
However, mark my words, that particular little boil hasn’t been lanced and may require a particularly sharp and hot needle at some time in the future. At which point the pound will jump again as silly little Brexit worries are once again forgotten.
Britain is safe and growing so why the hysteria about the exchange rate?