The UK’s trade deficit continues to increase due to rising energy prices, currency uncertainty and economic stress.
The Office of National Statistics reports that the seasonally adjusted deficit on UK trade in goods and services was £4.1bn in May, compared with £3.1bn in April.
For those hoping the UK will export its way to economic recovery, these new statistics are not good news. “Reflecting the major increase in the deficit, the outlook remains challenging with a raft of indicators pointing to an economy stuck in second gear,” comments KC Tan, head of trade at Barclays Bank.
Excluding oil and erratic items, the volume of exports was 1.9% higher in May compared with April, while the volume of imports was 6% higher.
The deficit on trade in goods was £8.5bn in May, compared with £7.6bn in April. The surplus on trade in services was estimated at £4.4bn in May, compared with £4.5bn in April.
Meanwhile, the total UK exports in May rose by £1bn (4.2%) to £25.4bn, and total imports rose by £1.8bn (5.8%) to £33.8bn.
Within the EU countries, compared with April, May exports to Germany rose by £0.4bn, exports to France rose by £0.3bn and exports to Belgium/Luxembourg rose by £0.2bn. Among non-EU countries, exports to India rose by £0.2bn.
KC Tan continues: “As energy prices add further pressure to the bottom line of UK businesses, exporters are juggling stubbornly high input prices, currency uncertainty, economic stress amongst key trading partners and huge hurdles when attempting to break into developing markets.”
“Nonetheless exporters continue to outperform business generally, and UK products still have a reputation for quality globally. Inroads are now being made in Asia, including a recent announcement of £1.4bn of trade deals with China, but this is still far too slow a process at present to really add fire to the plodding domestic recovery,” he concludes.
Reader Comments