Cable Says Pound Overvalued 10%-15%, Holding Back ExportsThomas Penny
Business Secretary Vince Cable said Britain’s economic growth is being hampered by stalled exports, partly as a result of the high value of sterling.
“Arguably, the pound is overvalued by 10 to 15 percent on a trade-weighted basis,” Cable told a side meeting yesterday at his Liberal Democrat party’s annual conference in Glasgow, Scotland. “This feeds back into monetary policy. It is a significant problem that we can’t directly address.”
Cable’s comments echo those of Bank of England Deputy Governor Ben Broadbent, who said in an interview in July that it’s “quite possible” the pound is 10 percent overvalued and its strength may have a long-lasting impact on inflation.
The International Monetary Fund said the same month in its External Stability Report that the pound was overvalued by 10 percent to 15 percent.