UK trade deficit widens as weak pound fails to boost exports
The latest trade report also shows the EU remains our biggest trading partner with figures showing exports to non-EU countries actually fell.
Figures published today show the UK’s trade deficit widened again in the second quarter of this year. In its latest trade report, the Office for National Statistics (ONS) said the total trade deficit widened by £2bn due to an increase in imports of both goods and services.
Weak pound is a “double-edged sword” for exporters
The report showed Britain’s exports of both goods and imports also enjoyed increases but just not enough to counter increases in imports. And despite expectations that a weak pound would boost exports, the figures show that isn’t happening. Commenting about the report, British Chambers of Commerce head of economics Suren Thiru said “the slump in the value of sterling since the EU referendum remains something of a double-edged sword, as many exporters are also importers”. He added that while he expected strong global economic growth to further boost the UK’s export performance, it’s “unlikely to be sufficient to prevent an overall weakening in UK growth”.
Businesses continue to report that the slump in the value of sterling since the EU referendum remains something of a double-edged sword, as many exporters are also importers, and so face higher import costs due to the weakening currency.
Suren Thiru, head of economics at British Chamber of Commerce
Exports to the EU rise and exports to non-EU countries fell
Here are a couple of charts from the ONS showing UK exports to the EU and to non-EU countries. Looking at the totals for each chart, you can see exports to the EU increased while exports to non-EU countries decreased. You can find the full trade report at ons.gov.uk.
Thiru highlighted the importance of the EU relationship saying “as the Brexit negotiations unfold, safeguarding the favourable terms of trade that UK firms currently enjoy with partners and markets in Europe and beyond must be a key priority”.
Indeed, as the figures show, the EU remains the destination of choice for the UK’s exports with exports to the EU growing by 2%. And in news that is unlikely to be welcomed by Brexit supporters, the report showed exports to non-EU countries actually fell by 1.4%.
Perhaps it’s not such a good idea to leave the largest trading bloc in the world and our largest trading partner after all…