The UK’s trade deficit in goods and services increased to £4.5bn in June, compared to a deficit of £4bn recorded in May, according to the latest UK trade data from the Office for National Statistics.
The country’s deficit in goods increased to £8.9bn in June, compared to a deficit of £8.5bn in May. Excluding oil and erratic items, volume of exports was 2.7% lower in June compared to May, while the volume of imports was lower by 5.8% in June compared to the previous month.
The news of a widening deficit potentially undermines the UK government’s efforts to encourage an export-led recovery.
Commenting on the latest statistics, Tan Kah Chye, head of trade at Barclays Corporate, comments: “International trade flows are starting to come under pressure as the global economy lurches from one crisis to the next.”
But he adds positively: “Although we’ve seen another rise in the trade deficit, at present UK exporters are still active, with orders steady and trade finance appetite strong.”
UK exporters are struggling to find sufficient demand for their goods in their traditional European markets, where governments are implementing severe cuts to spending.
“Intensifying market volatility and austerity measures being introduced amongst a range of the UK’s key trading partners highlight the challenges facing both exporters and importers,” observes Tan.
“Never has it been more important for the UK to look beyond the US and Europe for trade opportunities as the West continues to struggle under a mammoth debt burden,” he adds.
Yet, despite a number of recent high profile government-backed trade promotion trips to countries such as China and Brazil, non-EU exports (in goods) fell by 5.4% in June compared to May.