Weaker pound showing to cause little positive effect on UK exports.

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Weaker pound showing to cause little positive effect on UK exports.

If the hope that a weaker pound would provide a boost to UK exports, to date there are very few signs around that this will be the case for the near future.

In truth since the dramatic decrease in the value of Sterling on the global financial stage, the UK's trade deficit seems to widening. Figures show that the import/export ratios, with the possible exclusion of oil have fallen to their lowest level for a year. The difference being that in December of 2007, the reason being that then the pound was considerably stronger than it is today.

Taking into account the fact that it can take some time for adjustments in trade to filter through their system, and there is evidence around that a massive stock reduction is taking place around Europe and the World, there is a shrinking feeling among UK exporters that Sterling's plunging value is not a significantly positive factor in producing sales, for the simple reason that there are so few buyers around.

There is also no escaping the reality that a worldwide shortage of credit is having a major constricting effect in confidence to hold stock or any kind.

The weak pound means that the cost of importing raw materials has risen sharply as the Pound falls in value. All in all this represent a bleak picture for UK businesses for 2009, with little signs for optimism.

One little glimmer of light expected to be announced today aimed towards small (and getting smaller) businesses trying their best to keep their heads above water in today's shark infested financial sea, is a plan to guarantee up to £20bn of loans earmarked specifically towards these businesses.

The specific purpose of these loans is to help banks to grant loan to small businesses to ease and increase their credit lines, which will in turn increase their ability to grant credit to their customers. Lord Mandelson, UK business secretary is expected to make the announcement on Wednesday 14th January. Opposition leaders, in anticipation of the announcement, are skeptical of Mandelson's efforts to "kick start" UK business initiatives, and insist that £50bn should have been the minimum figure to allow the initiative to have any effect.

The £20bn is to be partly financed through a Working Capital Scheme that has been designed to provide banks the ability to be more forthcoming with small business loans, through virtually underwriting them.