UK trade gap swells
In a double-dose of bad news, Britain’s trade gap with the rest of the world has worsened.
The total UK trade deficit widened by £1.9bn to £9.7bn in the three months to April 2018, due mainly to falling exports of both goods and services.
UK trade gap
Photograph: ONS
Here’s the details:
Goods exports fell £3.1 billion, due mainly to falls in exports of machinery, pharmaceuticals and aircraft, while services exports also fell £2.5 billion in the three months to April 2018.
Falling volumes was the main reason for the declines in exports of machinery, pharmaceuticals and aircraft in the three months to April 2018 as price movements were relatively small.
The UK’s trade in goods deficit improved £0.6 billion with countries outside of the EU and worsened £1.2 billion with countries inside the EU in the three months to April 2018.
In April alone, the trade gap widened to nearly £5.3bn. Britain ran a surplus of £8.7bn on services, but that was more than wiped out by a £14bn deficit in goods.
This morning’s economic data paints a rather grim picture of the UK economy.
Here’s the ONS’s head of national accounts, Rob Kent-Smith:
“Manufacturing fell in the three months to April with electrical machinery and steel for infrastructure projects seeing reduced production. International demand continued to slow and the domestic market remained subdued. However, oil and gas production grew strongly in the aftermath of the Forties pipeline closure at the end of last year.
“While construction output saw a small bounceback in April after a poor start to the year, over the longer-term this sector continues to contract with significant falls across most types of work.
“Construction orders fell for a second successive quarter after recent boosts from large rail projects. However, new housing orders reached their highest level since before the economic downturn.
“The trade deficit widened as exports fell by more than imports, with exports of goods and services both declining. Exports of machinery, aircraft and pharmaceuticals all saw notable falls.”
BCC: Trade war fears are hurting
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), fears that trade war fears are already hurting UK exporters.
Here’s his take on Britain’s widening trade gap:
“The deterioration in the UK’s trade position in April is a concern and means that the UK’s trade deficit remains significantly higher than the historical average. This deterioration largely reflects a marked decline in exports in the month.
It is possible that the UK is now moving past the recent sweet spot for exporters, with growth in key markets moderating and the impact of the post-EU referendum slump in sterling, which has helped some exporters, subsiding. The possibility of an escalating trade war has added to the downside risks for exporters.
“More must be done to support UK exporters by addressing longstanding issues, from the lack of practical support for exporters to chronic skills shortages.”
Dharshini David
(@DharshiniDavid)
plunge in manufacturing output in April comes as export volumes see biggest drop since end-2016.... Brexit concerns leading to UK firms being chopped out of supply chains already?
June 11, 2018
Dharshini David
(@DharshiniDavid)
shock drop in manufacturing output (drops 1.4% on month, biggest fall for 5yrs) contradicts survey evidence and Bank of England hopes for rebound at start Q2. Underlines fragility of economy. Chances of summer rate rise recede?
All this weak economic data is bad for the pound.
Sterling has shed half a cent against the US dollar to $1.335. It’s down a similar amount against the euro, to €1.134.
The 1.4% tumble in UK manufacturing output in April has come as a nasty shock to economists, who had expected a small rise. It undermines hopes that the UK economy was bouncing back from its slowdown last winter.
https://www.theguardian.com/business/li ... iness-live
