A fall in export volumes and climbing imports pushed up Britain’s trade balance with the rest of the world in June, in another sign of the still elusive rebalancing within the UK economy a year after the Brexit vote.
Figures from the Office for National Statistics show the UK’s trade deficit in goods and services climbed by £2bn between May and June to £4.56bn – the widest since September 2016. The rise was driven by a 4.9 per cent slump in goods export volumes in the month – the worst performance since the Brexit vote last year – while imports increased by £1.7bn,
In the second quarter as a whole, the trade deficit edged up by £0.1bn to £8.9bn, with imports and exports growing at a similar pace of 4.8 per cent and 5 per cent respectively.
The UK’s trade deficit has yet to see a discernible improvement from the fall in the value of the pound over the last 12 months. Sterling has weakened around 13 per cent against the dollar since last June and is 8 per cent weaker on a trade weighted measure.
“Businesses continue to report that the slump in the value of sterling since the EU referendum remains something of a double-edged sword, as many exporters are also importers, and so face higher input costs due to the weakening currency” said Suren Thiru, head of economics at the British Chambers of Commerce.
Britain’s economy expanded by 0.3 per cent in the three months to June, up from the 0.2 per cent at the start of the year. The acceleration was driven by the country’s dominant services sector. For June, the ONS said exports and imports in services rose by £0.5bn in the second quarter.
Quarterly exports edged up by £0.3bn, on the back of chemicals and mechanical machinery sales.
“A deficit of £8.9bn in the second quarter suggests that net trade made no contribution to growth in the quarter”, said Howard Archer at EY Item Club.
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