COALITION ministers have talked a great deal about rebalancing Britain’s economy, but there was little evidence of that in yesterday’s dismal trade figures.
Behind the scenes, some sectors are doing rather well when it comes to flogging their wares to overseas buyers. Impressive numbers this week from luxury car-makers Bentley, Rolls-Royce and Jaguar highlight the ongoing renaissance in the nation’s motor industry. Further down the price scale, British-built Nissans and Minis are proving a hit with foreign buyers.
Yet that success in the global showroom failed to pump up the latest official data, which revealed that the UK’s goods trade deficit had widened by some £400 million in May to just over £9.2 billion. Thanks to a surplus in trade in services, the overall shortfall was pegged at a little over £2.4bn – still up from £2.05bn in April.
The monthly numbers have proved volatile of late and yesterday was no exception, with the deficit pushed up by imports of aircraft – products which are clearly high in value and traded infrequently.
That said, the underlying picture remains pretty dreary. Economists fear that net trade will have been of little help to GDP during the second quarter and may have actually been slightly negative.
It’s an additional headache for the rate-setters at the Bank of England’s monetary policy committee. Yesterday’s decision to leave interest rates at their historic low of 0.5 per cent had been a dead cert, and officials may have found some solace in news of a dip in import prices for traded goods.
Muted import prices point to consumer price inflation remaining low, giving the Bank greater leeway on when to start pushing up borrowing costs. In an effort to fuel exports, Chancellor George Osborne has taken some action – doubling the amount of export finance available to £3 billion and trimming the interest rates charged on the lending by a third. Welcome moves but unlikely to propel Britain into the exporting fast lane.
The British Chambers of Commerce was quick off the mark with its reaction to the trade statistics, acknowledging a gradual improvement in the long-term trend but expressing concern that the pace of rebalancing towards net exports was “far too slow”.
The business lobby group is likely to set out its stall when it publishes the results of its international trade survey next Tuesday. After the latest unexpected and unwelcome widening in our trade with the rest of the world, politicians would be wise to sit up and listen.
Adidas claims World Cup victory already
THE World Cup showdown between Germany and Argentina has yet to play out but already a winner has been declared. With Adidas providing the kit for both teams in Sunday’s eagerly awaited final, the German sportswear maker has proclaimed victory over US archrival Nike in the latest round of its battle to remain the biggest global football brand. An ebullient chief executive Herbert Hainer yesterday described his firm as the “clear number one”.
Nike, not to be outdone, kitted out more sides at the tournament for the first time – ten out of the 32 teams including hosts Brazil, compared with nine for Adidas.
The German group expects record football-related sales of about £1.6 billion in 2014, but Nike has suggested it could exceed that in its new financial year.
Looks like one contest that will rumble on.