Nicholas Craig column

May 4 2007 By Nicholas Craig, The Journal

The pound in my pocket seems to be getting stronger by the day. I can remember the time, a few decades ago, when the dollar/pound exchange rate was even greater but, back then, travel to America was neither plentiful nor easy. Tourists may be cheering, but some of our businesses are already being squeezed.

We have a strong export market, with many businesses enjoying well-stocked order books. As long as the orders continue to come in, local exporting companies will continue to trade well, although profit margins may suffer. If the pound continues to gain in strength over the longer term, however, those order books may dwindle alarmingly.

If American buyers begin to hesitate before buying, or let stock run down in the hope that the exchange rate will fall, exporters will have to rejig production schedules or find new markets quickly.

The same goes for companies that export to countries in Asia and the Middle East which link their currencies to the dollar.

It is not only our manufacturing companies that could be hit. Some of the region's smaller businesses which rely on tourists visiting the North-East may feel the squeeze. It could grow, affecting some of our most well-established companies, as well as niche firms such as Lindisfarne Limited that exports mead worldwide.

Against this, North-East businesses are generally faring better than they have for many years. In the UK, however, the spectre of further interest rate rises is dampening celebrations. These appear to be driven in part by the rise in house prices, particularly down south.

For this region, which has transformed its business base, regenerated its commercial centres and driven forward tourism to be clobbered by interest rate rises produced in part as a response to massive City bonuses is madness.

For any region outside of London to be affected by the spending choices of the City's financial community is, to put it mildly, unfair. We cannot allow real progress in the North-East to be slowed down by interest rate rises, the strength of the pound or the vagaries of bonus payments affecting house prices.

I like the idea of a `sales academy' to help boost the North-East economy by 30% and bring a possible new 100,000 jobs. Improving sales skills to sell more makes the most of what we have, however strong the pound or interest rate. Selling should be at the top of all our agendas for 2007.