LONDON: The soaring value of the pound has battered Britain’s manufacturing exports, leaving the economy reliant on the consumer-driven services sector for growth, the CBI has warned.
The business lobby group said the UK economy looked likely to gather momentum over the coming months after a steady performance so far this year, but said the strong pound had triggered a slide in export orders.
Over the past two years, sterling has risen by 15% against a basket of currencies, especially the sharply depreciated euro, increasing the cost of exports to Britain’s biggest overseas market.
Katja Hall, the CBI’s deputy director general, said businesses were alarmed by Brussels’ failure to end the Greek debt crisis, which has raised tensions inside the eurozone and dampened hopes of a sustained recovery across the 19-nation currency bloc.
The main risk to the UK economy comes from the eurozone, with continuing wrangling over Greece’s bailout package stoking uncertainty,” she said. “Plus, many businesses will also have to contend with a stronger pound weighing down on already weak export growth.”
After months of wrangling since the radical left Syriza government was elected in January, Athens has failed to resolve its differences with Brussels and its other major lenders, the International Monetary Fund (IMF) and the European Central Bank. The lurch from one set of crisis talks to another combined last week with renewed weakness in the US economy, where surprisingly weak jobs figures appeared to set back the date when the Federal Reserve raises interest rates.
