New research has poured cold water on the suggestion that the fall in the value of the pound will help the UK return to a golden age of manufacturing.

Sterling has slumped to record lows since the Brexit vote in June as investors become increasingly anxious about the nature of the UK's divorce from the European Union.

It remained under pressure in the latest session, trading below $1.22 against the US dollar.

That came as the yield on ten-year gilts - parcels of Government debt - rose to its highest level since June's referendum, suggesting investors are demanding a better return as they become wary about inflation rising.

The collapse in the pound will lead to higher prices for imported goods - a development that looks likely to put pressure on UK consumers.


Some experts have pointed to an upside, saying the pound has been overvalued and holding back exports because it makes UK goods too expensive for overseas buyers.

Will the pound's fall affect you?

But a research note from Deutsche Bank expresses scepticism about the idea that the pound's fall will propel Britain back to "a Victorian age in which British manufacturers export world-class products unencumbered by EU regulations".

The note said: "International economics has evolved since the Victorian era, however, and world trade no longer consists of final consumption goods being bartered for raw materials."

It pointed out that while manufacturers' final products would be cheaper for foreign customers, they would also have to pay more for imported raw materials.

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That means they would only benefit from the fall in sterling if they "add value" in the manufacturing process such as in leading industrial nations including Japan, the US and Switzerland.

But the research said latest data showed the UK was in fact more of an "assembly line" for products, like China, Hong Kong and South Korea.

Meanwhile, newly imposed EU tariffs could also hit manufacturers - both when they import goods from Europe and when they export them to the continent.

Financial and other business services are also a big part of the UK's export mix but they will face a hit because of the prospect of losing "passporting" services allowing easy access to EU markets.

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The fall in sterling would be unlikely to be enough the make up for that, the research said.

It concludes that the collapse in sterling "is unlikely to be the panacea some have seen for the UK's economic imbalances".

A separate report from the EY ITEM Club on Monday paints a more optimistic picture about the impact on exports of the falling pound.

It forecasts that they will grow by 4.5% next year accounting for almost all of the economy's expected growth as domestic demand slows.