Let us assume that the economy is at point A, experiencing a current account deficit. The government decides to devalue the pound to help eliminate this deficit. The J-curve shows that, in the short term, the deficit may get bigger before, eventually, it starts to reduce. In other words, the Marshall Lerner condition is not satisfied in the short run, even though it will be in the medium to long term.
Why might this be the case? The main reason is time lags. It takes time for producers and consumers to adjust their purchases to the changed prices brought about by the devalued exchange rate. Certainly, firms will have orders planned in advance, and will not react to the price changes for a number of months.
Exports revenues may not rise immediately, but they will not fall either, but foreign import revenues may well rise, as increased import prices are combined with static, or at least very inelastic, demand. The current account deficit will probably get worse. After a period of time, foreigners will react to the lower export prices and UK firms and consumers will react to the higher import prices. The Marshall Lerner condition should be satisfied as demand for both exports and imports become more elastic and the deficit should start to fall.
Remember that higher import prices will feed through to higher inflation eventually. This will reduce the competitiveness of British industry causing long-term problems for the current account. This is why many politicians see devaluation as failure. Once the economy is past the trough of the J-curve and the deficit is falling, the devaluation may seem like a good idea. But the subsequent rise in inflation (the government's number one macroeconomic objective nowadays) and its implications for competitiveness mean that devaluation is never a good long-term solution. British exporters complain of the high pound, but devaluation