The United Kingdom’s trade gap widened again in June after imports reached a record high, according to official figures.
The Office for National Statistics (ONS) said the UK’s deficit on trade in goods and services rose to £5.1 billion (€5.97 billion), growing from £4.2 billion in May.
Imports increased by £1.9 billion to reach a record high of £48.9 billion, while exports rose by just £1 billion.
Trade balance in goods
Britain’s trade balance in goods, stripping out the service sector, ballooned to £12.4 billion in June, its highest level for over a year. The ONS said the UK’s deficit on trade in goods rose £900 million from £11.5 billion in May.
The UK is looking to bolster its trade with the rest of the world to help drive economic growth after voting to leave the European Union.
However, the latest figures show the UK exported £12 billion worth of goods and services to the EU in June, an increase of £500 million compared with May.
Exchange-rate depreciation
Economists predict British exports will rise following sharp falls in the value of sterling, which are making UK goods more attractive to overseas buyers.
But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The latest trade figures underline that it takes years, not months, for exchange-rate depreciations to boost GDP growth.
“Despite sterling’s depreciation, which began in November, the trade deficit widened. Looking ahead, the trade deficit likely will remain bloated in the near term, as sterling’s depreciation will continue to make imports dearer.”
Weak manufacturing figures
The disappointing figures come alongside weak manufacturing figures, which fell by 0.3 per cent in June, well below economists’ expectations of 0.0 per cent.
Mr Tombs added: "We fear that the trade boost could take even longer than usual to materialise this time, because exporters will be very reluctant to invest until the UK's future trade arrangements are known. In short, hopes that exports will surge and offset the Brexit hit to domestic demand seem misplaced." – (PA)
