According to official figures the UK’s trade deficit has narrowed as exports overtook imports, reducing the nation’s trade gap by £3.5 billion in November. Despite narrowing the figure still remains higher than expectations.
The total number of goods exported by the UK increased by 2.9% to £24.8bn led by chemical sales, whilst imports rose by 1.1% to £34bn. Imports from the European Union, Britain’s main trading partner, increased to their highest value since May 2006, being driven by chemicals and cars.
Howard Archer of IHS Global Insight said; “While the trade deficit narrowed in November, the improvement was relatively limited and it still looks more likely than not that net trade was negative in the fourth quarter, thereby increasing the risk that there was a renewed dip in GDP.
‘While Eurozone economic activity may have bottomed out around October, it is still limited with little sign of any significant pick up. At least though, the U.S. avoiding going over the fiscal cliff and a recent easing of Eurozone sovereign debt tensions has reduced the downside risks for UK exporters going forward.”
The goods trade deficit with non-EU countries saw an unexpected increase, after many economists had predicted that exports to the rest of the world would increase as the UK attempts to limit the impacts of the Eurozone crisis. The deficit widened to £4.519 billion from £4.502 billion.
Rob Wood, Berenberg Bank said; “There are good and bad aspects, I think. There were some encouraging signs of stabilisation in exports to the EU which rose substantially on the month. On the other hand, exports to non-EU countries fell quite a bit.
These figures can be volatile from month to month so I don’t want to read very much into those one-month moves. The overall trade balance was disappointing, in line with expectations. I think he best way to describe the economy is fragile but stable and it will remain this way for the next couple of quarters.”
Economists are predicting that trade will prove to be a drag on the UK’s 4th quarter figures for 2012, it has to be seen whether the UK contracted in the last few months of last year.
The Pound to Euro exchange rate is currently trading at 1.2282
The Pound to US Dollar exchange rate is currently trading at 1.6062
The Pound to Australian Dollar exchange rate is currently trading at 1.5290
The Euro to US Dollar exchange rate is currently trading at 1.3073
The Euro to Pound exchange rate is currently trading at 0.8139
Comments are closed.