UK Reduces Goods Trade Deficit

Imports Fall But Exports At Three Year Low


Steven Beahan, Partner | +44 (0)114 294 7868

New research has revealed the goods trade deficit in the UK was reduced to £9.1 billion in February, down from £9.4 billion the previous month.

The figures have been unveiled by the Office for National Statistics (ONS) and marked a more favourable outcome than had been predicted by leading economists.

Forecasts that had been released by ONS before the report stated that the deficit was expected to be reduced, but only to £9.2 billion.

The news is likely to make positive reading for many people who have warned that the UK's over-reliance on domestic trade is threatening to compromise the signs of recovery in the economy seen over the last 12 months.

This is particularly true for secondary industry, which has been buoyed in recent months by the significant improvement in the performance of the manufacturing sector.

It was not a wholly positive picture that was unveiled by the ONS report though, with the news that exports were found to be at their lowest level for more than three years.

A 2.2 per cent reduction in imports yielded the overall shift in the goods trade deficit, offsetting a fall in exports of 1.6 per cent.

Although the wider figures show that there has been an improvement, firms' inability to harness month-on-month export increases will no doubt be a concern for many bosses looking to raise market share and expand amid an anticipated economic upswing.

The data also allowed ONS analysts to consider the activity that took place in specific industries, with a closer look revealing the aerospace sector was responsible for the majority of the fall in imports.

Imported aircraft parts were subject to a 46 per cent fall following a conscious drive by bosses to reduce their reliance on suppliers from abroad.

Howard Archer of IHS Global Insight explained that only skimming the surface of the figures could lead to some misconceptions about the current trajectory of the economy.

He said: "Looking ahead, net trade will likely struggle to make a sustained, significant positive contribution to UK growth in the near term at least as imports are likely to continue to be underpinned by decent UK domestic demand."

Expert Opinion
It is disappointing to see that export levels were at their lowest level for more than three years.

“There have been a lot of positive noises recently about increased levels of confidence and optimism within the UK about exporting. The FSB and the BCC recently issued reports about this and hopefully this positive mood will filter through to some stronger figures in the coming months.

“This is another timely reminder that sustained economic growth is not certain and a lot more needs to be done to encourage companies to develop international trade links. Small and medium-sized companied have a big role to play and it is vital that the Government recognises this and ensures their needs are met.”
Steven Beahan, Partner