Time to give up on a boost from trade?

Almost two years on from the start of sterling’s Brexit-related slide, the effects on net trade have been disappointing. Since the pound’s fall, net trade has actually detracted from growth as opposed to bolstering it. This has led some to write off any chance of a boost to growth from trade. However, the lag between past depreciations and improvements in the trade balance suggest it is premature to conclude that the pound’s fall has been in vain. Indeed, goods exports are benefitting from the weaker currency. And we expect consumer and import growth to slow somewhat ahead. As such, we still expect net trade to provide a boost to growth.