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China's radical steps leave the UK ticking over nicely

Outlook

Jim Armitage
Wednesday 12 August 2015 01:20 BST
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The Treasury must be rather relieved by China’s dramatic action on the yuan.

For, with the move to slash the value of its currency, our imported Chinese goods become ever cheaper. And that, on top of the pound’s strength and the weakened oil price, preserves our zero-inflation environment and grants the Bank of England ever more scope to keep interest rates low.

Of course, the weaker yuan will make life tougher for some of our exporters. But, despite all the trade junkets and diplomacy by our politicians, UK sales to China are still well under half the £35.6bn we import.

So, thanks Beijing. Britain’s sweet spot of high employment, decent growth and low inflation will stick around for a while.

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