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UK trade deficit falls after record rise in exports UK trade deficit falls after record rise in exports
(35 minutes later)
A record jump for Britain’s goods exports helped the country’s trade deficit fall more than expected in April.A record jump for Britain’s goods exports helped the country’s trade deficit fall more than expected in April.
Coming after a set of healthy figures from the high street and the manufacturing sector, the trade figures showed the UK economy had steadied ahead of the EU referendum, following a wobble in the first three months of the year.Coming after a set of healthy figures from the high street and the manufacturing sector, the trade figures showed the UK economy had steadied ahead of the EU referendum, following a wobble in the first three months of the year.
The chancellor George Osborne was also handed an extra boost after figures showed the growth in exports over the past year was mainly to the rest of the EU, with only a small rise in sales to the rest of the world. The chancellor, George Osborne, was handed an extra boost after figures showed the growth in exports over the past year was mainly to the rest of the EU, with only a small rise in sales to the rest of the world.
Exports of British-made goods to the EU increased by 10.3% compared with a year ago while non-EU exports nudged just 1.9% higher.Exports of British-made goods to the EU increased by 10.3% compared with a year ago while non-EU exports nudged just 1.9% higher.
However in April alone exports to the rest of the world performed better after a £1.3bn jump to a record £14bn, compared with a £900m rise in exports to the EU. However, in April alone exports to the rest of the world performed better after a £1.3bn jump to a record £14bn, compared with a £900m rise in exports to the EU.
The latest figures also ease concerns after last month’s figures showed Britain’s trade deficit with other EU countries was running at a record high. Britain’s current account deficit, which reflects the trade gap with the rest of the world and the shortfall between money paid out by the UK and money coming in, is one of the biggest in the world.The latest figures also ease concerns after last month’s figures showed Britain’s trade deficit with other EU countries was running at a record high. Britain’s current account deficit, which reflects the trade gap with the rest of the world and the shortfall between money paid out by the UK and money coming in, is one of the biggest in the world.
The rise in the deficit to almost 7% in March was seized on by campaigners for Britain to remain in the EU, who argued it would only worsen if Britain quit the single market. Brexit supporters have argued that bringing down trade barriers outside the EU would spur exports to the rest of the world.The rise in the deficit to almost 7% in March was seized on by campaigners for Britain to remain in the EU, who argued it would only worsen if Britain quit the single market. Brexit supporters have argued that bringing down trade barriers outside the EU would spur exports to the rest of the world.
Related: UK trade deficit with EU hits new recordRelated: UK trade deficit with EU hits new record
Overall, goods exports volumes increased by 11.2% in April – the biggest monthly rise since records began in 1998. At £26.1bn, the total value of goods exported in April was close to the record high set in June 2013. Imports also increased, but by £2bn to £36.6bn. Overall, goods exports volumes increased by 11.2% in April – the biggest monthly rise since records began in 1998. At £26.1bn, the total value of goods exported in April was close to the record high set in June 2013. Imports also increased, by £2bn to £36.6bn.
The trade deficit in goods fell to £10.5bn from a downwardly revised £10.6bn in March, according to the figures from the Office for National Statistics. The total trade deficit, including services, narrowed to a seven-month low of £3.3bn in April from a downwardly revised £3.5bn in March and a peak of £5.2bn in January.The trade deficit in goods fell to £10.5bn from a downwardly revised £10.6bn in March, according to the figures from the Office for National Statistics. The total trade deficit, including services, narrowed to a seven-month low of £3.3bn in April from a downwardly revised £3.5bn in March and a peak of £5.2bn in January.
The increase in exports to the EU follows a steady rise in economic growth across the 28 member states, at a time when emerging economies have struggled to maintain the strong expansion of the last two decades and previously fast-growing countries Russia, Brazil and South Africa have slumped into recession.The increase in exports to the EU follows a steady rise in economic growth across the 28 member states, at a time when emerging economies have struggled to maintain the strong expansion of the last two decades and previously fast-growing countries Russia, Brazil and South Africa have slumped into recession.
Zach Witton, deputy chief economist at EEF, the manufacturers’ organisation, said the data provided some encouragement that the UK’s export performance was improving, “backing up recent signs that Europe’s economic recovery is gaining momentum, while global growth may be starting to turn a corner”. Related: What would Brexit mean for UK trade deals?
He said it was also possible that the recent weakness of sterling may be providing some support for exporters, though there was still “a long way to go to reach the government’s export target of £1 trillion annually by 2020”. Zach Witton, the deputy chief economist at EEF, the manufacturers’ organisation, said the data provided some encouragement that the UK’s export performance was improving, “backing up recent signs that Europe’s economic recovery is gaining momentum, while global growth may be starting to turn a corner”.
Howard Archer, chief economist at IHS Global Insight, said the figures gave hope that the overall weakening of the pound since late-2015 could be feeding through to help UK exporters. “Along with the jump in industrial production in April and decent retail sales growth, the trade data suggests UK GDP growth could be holding up better in the second quarter than has been thought – despite the heightened uncertainty,” he said. He said it was also possible that the recent weakness of sterling may be providing some support for exporters, though there was still “a long way to go to reach the government’s export target of £1tn annually by 2020”.
Howard Archer, the chief economist at IHS Global Insight, said the figures gave hope that the overall weakening of the pound since late-2015 could be feeding through to help UK exporters. “Along with the jump in industrial production in April and decent retail sales growth, the trade data suggests UK GDP growth could be holding up better in the second quarter than has been thought – despite the heightened uncertainty,” he said.
In 2015, the sale of goods and services to the EU accounted for 44% of total exports. Almost half of the UK’s exports of goods go to the EU, compared with 39% of services. The share of exports to the EU has fallen by more than 10 percentage points over the last 15 years.In 2015, the sale of goods and services to the EU accounted for 44% of total exports. Almost half of the UK’s exports of goods go to the EU, compared with 39% of services. The share of exports to the EU has fallen by more than 10 percentage points over the last 15 years.