Trade deficit widens again

Posted on 12 Aug 2009 by The Manufacturer

The UK’s trade deficit in goods widened to £6.5bn in June from a revised figure of £6.2bn in May, according to official figures.

The Office for National Statistics revealed that the overall deficit on trade in goods and services was £2.2 billion in June, compared with the deficit of £1.9 billion in May.

Exports of goods did in fact rise by £0.3 billion in June but imports rose also by £0.5 billion.

The deficit with EU countries narrowed to £2.8 billion in June, from £3.0 billion in May. But with non-EU countries it widened from £3.2bn to £3.6bn.

When oil and erratic items are taken out of the equation, imports and exports both rose by 2.5 per cent in June compared with May and Iain MacDonald, head of trade product, Barclays Commercial, said this shows that “an equilibrium in importing is now being reached.”

He said: ““Destocking is still a focus for those businesses trying to gain greater control of their working capital but it is easing. We are also seeing a small but significant increase in confidence around commodity pricing.

“The 2.5 per cent increase in export volumes in June reveals demand for the higher cost and quality products the UK specialises in exporting is also bottoming out as globally many businesses are beginning to consider significant capital outlays once more, although total quarterly exporting figures are still down.”

Export and import prices both fell by a half per cent compared with May.