Boost for UK economy as trade deficit narrows

Although it fell to a seven-month low, economists said the trade deficit remains too large. Picture: Contributed
Although it fell to a seven-month low, economists said the trade deficit remains too large. Picture: Contributed
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The UK trade deficit fell to a seven-month low of £3.3 billion in April in a boost for the economy, official new data has revealed.

The figures from the Office for National Statistics compared with £3.5bn in March and a peak of £5.2bn in January. City economists were encouraged by UK exports rising 5.3 per cent month-on-month in April.

Exports of traded goods excluding oil rose 6.2 per cent month-on-month. Howard Archer, chief UK economist at IHS Global Insight, said: “This boosts hopes the marked weakening of the pound since late-2015 may be feeding through to help UK exporters.”

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Archer said that recent firmer growth in the eurozone “may have helped” the better-than-expected trade gap performance, with traded goods exports to the single currency bloc up 7.4 per cent in April in the run-up to Britain’s EU membership referendum vote later this month.

The reduction in Britain’s trade deficit came despite a £2bn rise in imports to £36.6 billion, the ONS said. It added that exports by volume leapt higher in April, rising by 11.2 per cent, the biggest increase since records began in 1998. April’s deficit in goods alone shrunk to £10.5bn from £10.6bn in March.

However, David Kern, chief economist at the British Chambers of Commerce, said the trade deficit remains “unacceptably large”.