Concerns remain as deficit narrows on falling oil price

The oil price downturn has led to thousands of redundancies in Aberdeen and the surrounding areas. Picture: Danny Lawson/PA Wire

The oil price downturn has led to thousands of redundancies in Aberdeen and the surrounding areas. Picture: Danny Lawson/PA Wire

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The UK’s trade deficit narrowed to £3.2 billion in November on the back of falling oil prices, but economists said the gap remains excessively wide and threatens the country’s economic future.

The data was revealed by the Office for National Statistics (ONS), which said the fall – from £3.5bn in the prior month – was mainly due to trade in goods, where the deficit dropped to £10.6bn from £11.2bn in October. The import of goods fell by £900 million to £33.9bn.

Commenting on the latest ONS figures, British Chambers of Commerce chief economist David Kern said: “Despite the reduction in the UK’s trade deficit in November, it is now likely that for the quarter as a whole the deficit worsened.

“The disappointing export figures confirm the findings from our own quarterly economic survey this week, which showed particularly weak balances for manufacturing exports.”

READ MORE: Politicians urge action as oil price falls to $32.62

Kern added: “Although worsening global headwinds are contributing to the UK’s excessive trade deficit, the broader message is that unless radical measures are taken to strengthen our export performance, our trade deficit will continue to be a threat to the country’s long-term economic performance.”

IHS Global Insight chief UK and European economist Howard Archer said that, despite the trade gap narrowing in November, it was still “uncomfortably high as exports were lacklustre”.

He added: “While the recent weakening of the pound is welcome news for UK exporters, they will be concerned by the current uncertain global economic outlook.”

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