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Exporters enjoying pre-Brexit 'sweet spot', says BoE official

UK exporters are enjoying a "sweet spot" as they benefit from the "post-referendum but pre-Brexit" period - but it is unlikely to last, a deputy governor of the Bank of England said.

Ben Broadbent said that while the collapse in the pound may have hit households as it pushes up prices, it was providing a "boon" to overseas sales.

His remarks came as industry figures showed UK car production at a 17-year high thanks to a strong rise in exports.

Meanwhile, a separate report from a think-tank played down fears about the impact of walking away from the EU without a trade deal saying the benefits of membership had been "largely imaginary".

The pound has plunged by 16% against the US dollar and 15% versus the euro since last June's referendum, making exports more competitive and worth more when translated back into sterling.

But at the same time, British companies are not yet subject to the possible barriers that many fear will hamper trade when the UK does complete its divorce from the EU.

Mr Broadbent said: "The result - higher prices and profits but unchanged rules and costs - represents something of a sweet spot for exporters and businesses that compete with imports."

But he said that this was "unlikely to last indefinitely" - either because Brexit would make trade tougher or the outcome would not be as bad as feared, in which case sterling would rise.

Mr Broadbent added that the fall in the pound should be giving exporters a "powerful incentive" to invest but that this was being held back by fears over what Brexit would mean.

The remarks came in a speech at Imperial College London.

Meanwhile, figures from the Society of Motor Manufacturers and Traders showed more than 150,000 cars were built in the UK last month, the highest February figure in 17 years.

Demand was driven by a 13% rise in exports compared to a 7% fall in production for the home market.

Elsewhere, a report from Civitas, called "It's Quite OK to Walk Away", used an analysis of trade growth over four decades to dismiss the benefits of EU membership over the period.

It said the growth of goods exports of the UK to 11 long-standing members of the EU had been "barely distinguishable" from those of 14 countries exporting under World Trade Organisation rules.

Author Michael Burrage said: "The evidence shows that the disadvantages of non-membersip of the EU and single market have been vastly exaggerated."