STERLING’S slide earlier this week is a double- edged sword.

While it has been caused by renewed concerns among international investors about the parlous state of Britain’s public finances, the devaluation of our currency could boost the country’s recovery from recession.

In the past couple of months, investors have been distracted by the even worse economic woes suffered by Greece. Now that problems there have been resolved, international markets have turned their attention to the political and economic uncertainties here, in particular those created by recent opinion poll surveys ahead of the forthcoming General Election.

The pound is now below $1.50, down 4 cents on its price at close of business last week. The fall has been attributed by market observers to the flurry of opinion poll results suggesting a hung Parliament.

A hung Parliament, it is feared, would scupper City hopes that something will be done to tackle the UK’s deficit, forecast to exceed 12% of GDP.

If nothing is done, the public sector debt problem will be exacerbated by interest rates rising, adding further to the pressures.

The City’s real concern is that Labour could hold sway over public finances through a coalition government. The party has pledged to postpone spending cuts for the time being to help sustain some demand in the economy.

The Conservatives, on the other hand, are set on tackling the deficit urgently, should they win power. According to former chancellor Ken Clarke yesterday, the market would give the next government 50 days to come up with a convincing plan to restore public finances, otherwise they would lose patience. Mr Clarke even suggested the markets already don’t really believe the country’s current AAA credit rating.

But while sterling’s weakness may reflect the troubles we face, it is good news for the nation’s manufacturers, enabling them to sell into faster growing economies overseas.

Examples of manufacturers that are sensitive to currency rates are Deeside-based Airbus and Jaguar Land Rover. Manufactured in Britain and the eurozone, but with selling prices denominated in dollars, Airbus should find it easier to compete against its big rival Boeing.

One marketplace Airbus has struggled to crack is Japan, where only 10% of the market flies Airbus planes. There is also the impending threat posed by the Boeing’s new 787 appearing over the horizon.

IF YOU think we have problems here, you should take a close look at what is happening in Ireland.

Yesterday, Allied Irish Bank posted its first ever loss. The loss came in at 2.3bn euros, better than the forecast loss of 2.9bn euros.

Dodgy property loans lie at the heart of the problem. The bank has 24bn euros of mostly property loans that it wants to place into Irelands’s proposed bad bank.

In all, Irish banks are looking for about 80bn euros of Irish government support.

Irish banks were very active in this part of the world, supporting many property schemes in the good times.

AIB may yet be forced to go back to government for more support, but it says it would prefer to find new investors and sell off some of its stronger overseas units.

But the fact is the problem will only be fully resolved when the general economy improves.

Sadly, there is no real sign of growth in the  Irish economy, a situation that may continue for a couple of years yet.