Britain’s trade position deteriorated in July after imports increased at a faster rate than exports, shedding a bleaker light on the economic recovery.
The most recent data from the Office for National Statistics shows the trade in goods deficit widened to £10.2 billion from £9.4 billion in June, lower than City expectations that the deficit would narrow to £9.1 billion. July’s deficit almost matched the largest monthly deficit on record – £10.3 billion in April 2012.
Rising imports of fuel, chemicals and aircraft drove up the deficit, whereas exports were driven mainly by oil trade with non-EU countries.
The National Institute of Economic and Social Research thinktank estimated that the UK economy grew by 0.6% in the three months leading up to August, signalling a slow in growth.
Despite the disappointing trade figures, manufacturing output in July was up 0.3% on the month, up 2.2% on the year and total industrial production in July 2014 was up 0.5% on the month, 1.7% on the year.
Commenting on the statistics, David Kern, chief economist at the British Chambers of Commerce, said:
“These figures highlight the strength of the recovery and the challenges still facing the UK economy. On the positive side, the production figures confirm that the recovery is still on course, although the pace of manufacturing growth shows some signs of easing.
“However it’s a concern that the trade deficit has widened, as this will hamper our ability to rebalance the economy. Stagnation in the eurozone remains a challenge, and reinforces our position that the MPC should not raise interest rates in the immediate future. The UK still has a long way to go before it is fulfilling its true potential on international trade. It is clear that more support is still needed to help UK businesses – both those that have not exported before and those looking to break into new and fast-growing markets overseas.”
The rise in exports was driven mainly by trade with countries outside of the EU, prompting hopes that the UK can continue to strength ties with fast developing countries world-wide.
Photo by Mrhayata