UK trade deficit improves as exports rise
The latest figures from the Office for National Statistics show that the UK's trade gap decreased by £2.7bn in the second quarter of this year.
The news from the ONS revealed that the country's trade deficit with the rest of the world dropped to £4.8bn in spite of the strength of the pound on the international money markets.
Lowest quarterly gap for four years
The £2.9bn increase in exports during the period was largely due to an increase in sales of chemicals, fuel and motor vehicles. Although Britain actually had a £27.4bn goods gap, it was offset by a surplus in financial and consultancy services worth £22.6bn
Chief economist at manufacturers’ group the EEF, Lee Hopley, said: “The UK’s trade performance adds to the generally positive data seen over the past month with the deficit narrowing and goods exports to both European and non-EU markets improving, especially to France, China and the US.”
The ONS report also highlighted another factor, namely that the cost of imports has been declining and is currently dropping at a rate of 6.2% a year.
The overall effects on the UK economy mean that the latest figures may have an impact on future interest rate increases.
Bank of England governor, Mark Carney, has recently commented on the strength of the pound and how it was a key factor in this week's decision of the monetary policy committee to hold rates at their historically low levels, at least for the moment.