Some cause for economic optimism?

There has been much written and spoken about the falling value of sterling as this week the pound hit new lows against the euro and fell to its lowest value against the dollar for over 2 years.
There are benefits though and in the Times this morning,Anatole Kaletsky argues for them.

She believes that

there is more and more evidence that the housing slump will do less damage to the British economy than is expected at present. Secondly, Britain is in generally better shape to deal with a mortgage and housing crisis than any other important European economy.

and points to America where

the country generally believed to be most vulnerable to the housing and credit crises, has done better than any other important economy - and much better than expected. Not only has the US thus far managed to avoid a recession, but the OECD's growth forecast for 2008 as a whole has also been substantially upgraded, from 1.2 per cent to 1.8 per cent

If Britain follows the American model then as house prices fall,consumers will slow spending over a longer period rather than triggering a slump.And secondly the low rate of sterling will lead to increased exports and diminished imports.This is what effectively happened in 1992 after the pound fell out of the ERM.

Of course,this second premise relies on the country having a strong manufacturing base and the question is has Britain got that ability any more.

It will also mean the Bank of England being brave and cutting interest rates.A decision on that later today but all the signs are they will stay the same