A disappointing performance for exports in June pushed the trade deficit higher than expected according to the latest batch of official data, frustrating hopes of a currency-driven rebalancing of the UK economy.
Manufacturing also stagnated in the month and construction went backwards, adding to the impression of Britain losing momentum as the clock ticks down to Brexit in 2019.
Goods export volumes fell 4.9 per cent in June, the biggest monthly fall since June 2016, while imports were up 1.5 per cent, said the Office for National Statistics (ONS).
That left the goods trade balance for the month at £12.72bn, higher than the £11bn City of London analysts had expected.
Since last June’s Brexit vote, goods export volumes, excluding erratic items such as non-monetary gold and aircraft, are up 6 per cent. But over that period import volumes are also up 6.3 per cent, suggesting no contribution to GDP growth from net goods trade.
“This [data] is particularly concerning when you consider the backdrop of a 13 per cent post-Brexit fall in the pound and the significant improvement in global growth prospects, particularly in Europe, a key trading partner for the UK,” said James Smith, economist at ING.
“One possible explanation for this is that the impact of the weaker pound has been less pronounced than it might have been 10 to 20 years ago. The increasingly interconnected nature of global supply chains means exchange rate fluctuations are less of a key determinant of competitiveness.”
Source: independent
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