Mind the gap: vital exports left trailing by record level
BRITAIN’S ability to pay its way out of recession was under fresh doubt last night, as figures revealed the country was racking up a widening trade deficit.
The Office for National Statistics found the gap between the value of imports and exports rose to £4.3 billion in June, up from £2.7bn the previous month – the highest level since comparable records began in 1997.
Analysts last night said the figures were particularly worrying as the slump in trade had been not just with the troubled eurozone region, but also outside the EU, prompting warnings that even if the European crisis eases, the country could remain in difficulty.
They also said that Chancellor George Osborne’s hopes of rebalancing the economy towards its export-led manufacturing base was not yet showing signs of materialising.
With the Bank of England having earlier this week revised down its growth forecasts to zero for this year, it will place yet more pressure on the coalition government to support a “Plan B”, to stimulate a private-sector recovery.
The UK is now in the throes of the longest double-dip recession since the 1950s, after the economy shrank by a larger-than-expected 0.7 per cent in the second quarter.
Taking the second quarter of 2012 as a whole, trade in goods and services was estimated to have been in deficit by £11.2 bn, compared with a deficit of £7.8 bn in the preceding quarter and again the highest since records began.
The ONS said that, for May and June 2012, data might have been affected by the changed pattern of public holidays. In total, exports fell by 4.6 per cent month on month, with a larger share of the drop-off made up in sales to non-EU countries.
The slump was driven by lower trade of oil, particularly to the United States, chemicals to all non-EU countries, and cars, particularly to China.
David Kern, chief economist at the British Chambers of Commerce, said: “There is no question that British exporters are facing major challenges as a result of problems in the eurozone, but the rebalancing of the UK economy towards exports is taking too long.
“British exporters have untapped potential to expand, but they need more government support to help them compete and diversify towards growing markets outside the EU.”
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Hopes that net trade could boost overall economic activity have proved to be horribly misplaced.”
Vicky Redwood, an economist at Capital Economics, said the data were “pretty dreadful”.
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Tuesday 18 June 2013
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