British exporters see long-term gains from sterling depreciation

SHEFFIELD: With 85 per cent of its customers outside Britain, Sheffield-based Gripple should be cheering the plunge in sterling since last year’s vote to leave the European Union, which means every overseas sale brings in more pounds than before.

British exporters are enjoying a Brexit windfall as a result of the pound’s fall, which has helped push up the value of the goods they export by 15 per cent since a year ago. Some hope the boost to manufacturers will foster a rebalancing of the economy, which has long relied on domestic consumers.

But Gordon Macrae, a senior manager at Gripple, which makes metal parts used to connect and tension steel cables, does not expect the boost to last long enough to justify speeding up investment plans, despite strong demand for its products.

“My honest view is that the government is slightly delusional if it senses there is a great opportunity for companies with the current value of sterling,” he said, speaking at a Gripple factory in the northern English city of Sheffield.

Leading Brexit advocates have said the cheaper pound will stimulate exports and investment, while pro-Brexit newspapers have seized on the improved trade figures to talk of an export boom for Britain ahead of June 8’s national election.

The Bank of England predicts export growth will outpace domestic consumption this year as rising inflation — also largely a product of the weaker currency — eats into households’ spending power.

But Macrae said Gripple, whose customers prefer to be billed in their local currency, was wary of using the changing exchange rate to compete on price.

“In terms of being able to build long-term customer relationships, the worst thing you can do is to be moving your prices up or down,” Macrae said.

Instead, customers that range from the builders of central London skyscrapers to farms in the Australian outback pay a premium for products that Gripple says are easier to install than its rivals’ and have stronger aftersales support.

Gripple’s ability to cut prices is also limited by the cost of raw materials. Zinc prices have doubled in dollar terms since the end of 2015, and sterling’s fall has intensified the effect. “We have seen a double whammy,” Macrae said.

Camira is a weaving company based just over 20 miles away in Huddersfield.