UK trade deficit: What the experts say
City economists agree that June’s trade figures are pretty dire, although it can’t all be blamed on the EU referendum.
Ben Gutteridge, Head of Fund Research at Brewin Dolphin, hopes that the weak pound will help in future:
“The deficit in the UK Trade Balance deepened in June and by an amount more than had been expected. The period over which the data has been collected is broadly pre-Brexit but still helps to confirm the widely acknowledged view that the UK is a bigger importer of goods than it is an exporter. Indeed that the UK commands such an important share of European export, it is considered to be an excellent platform from which to negotiate a favourable separation from the European Union. Of course, the politics of extending a favourable deal to non-members does, in some way, defeat the purposes of having a club, so the outcome of such negotiations remain highly uncertain.
“As for trade figures going forward the drop in sterling will have significantly improved the competiveness of our goods and services globally. Over the medium term, therefore, the UK economy can expect to enjoy a genuine boost to activity, allowing the trade balance to narrow; all else equal.
But a weak pound will hit people in the pocket, points out the Resolution’s Foundation’s Duncan Weldon:
Sky News’s Ed Conway fears any improvement will take a while….
Economist Rupert Seggins shows that Britain’s been running a trade deficit for over a decade:
Former Bank of England policymaker Andrew Sentance says today’s data has limited use when assessing life after Brexit:
23m ago 10:24
Today’s figure also show that Britain ran its largest trade gap with Germany importing £5.5bn but only exporting £2.67bn.
Mind you, the UK ran deficits with most countries but did post a surplus with Ireland and the US.
UK trade relationships
39m ago 10:08
Alarmingly, Britain’s £12.5bn trade in goods deficit is the worst for any June, ever, and the highest for any month since March 2015.
46m ago 10:01
In June alone, Britain exported £12bn of goods and services to the European Union, up by £500m compared to May.
But Britain also imported £20.3bn from the EU, up by £800m, so the overall trade gap with the EU worsened.
— Mehreen (@MehreenKhn)
August 9, 2016
UK imports from EU rose in Brexit month – overall trade deficit in goods worsened to £20.3bn https://t.co/VuTXC9zpQY pic.twitter.com/V3VBbS2dvZ
Updated at 10.03am BST
50m ago 09:57
Britain’s trade figures remain an ugly picture
Britain’s trade figures are an ugly picture Photograph: ONS
53m ago 09:54
UK trade deficit widens as imports hit record high
Britain’s trade deficit has worsened after imports hit a new alltime high.
The UK’s deficit on trade in goods and services jumped to £5.1bn on in June 2016, up from £4.2bn in May, according to the Office for National Statistics.
Exports increased by £1.0bn and imports increased by £1.9bn. Imports reached a record high of £48.9bn.
The deficit on trade in goods (which strips out the service sector) rose by £900m to £12.4bn in June 2016, the ONS adds.
The report also shows that Britain’s trade deficit with the rest of the European Union has widened by £400m over the last three months. That’s because the UK continued to import more than it exported back to its EU neighbours.
The ONS says:
Between Quarter 1 2016 and Quarter 2 2016, exports of goods to EU countries increased by £1.8 billion due to exports of cars, increasing by £0.4 billion to a record quarterly high of £3.2 billion; oil increased by £0.3 billion and both machinery and chemicals increased by £0.2 billion each.
For the same period, imports from the EU increased by £2.2 billion to a record quarterly high of £59.4 billion. This increase reflected a £0.8 billion increase in food, beverages and tobacco; a £0.4 billion increase in machinery; a £0.3 billion increase in oil; and a £0.1 billion increase in aircraft to a record high of £0.9 billion. These increases were offset by a decrease in works of art of £0.2 billion.
So, not a great picture for a country facing the uncertainty of Brexit. Reaction to follow!
Updated at 10.00am BST
1h ago 09:35
UK industry posts strongest quarter since 1999
Here we go!
First… UK industrial output rose by 0.1% during June, meaning output was 1.6% higher than in June 2015.
But the narrower manufacturing output measure shrank by 0.3% during the month, worst than the 0.2% decline expected.
There’s not much immediate sign of a Brexit hit. Indeed, industrial output over the last three months grew at the fastest quarterly rate sine 1999 – after a knockout April. Transport manufacturing drove the sector forwards.
2h ago 09:12
Property market hit by Brexit vote
Busses pass the former Reuters building in Fleet Street.
Photograph: Carl Court/Getty Images
Britain’s EU referendum is already causing angst in the property market.
CBRE, the real estate advisor, says that office values fell by 3.3% across the UK in July, with steeper falls in the capital:
The fall in capital values was widely expected and pulled year-on-year growth down to 0.4%. Heightened economic uncertainty, especially for financial services firms, hit offices in the City of London, shrinking capital values by -6.1%.
And Savills, the estate agent, has reported that profit at its UK commercial property division more than halved in the first six months of this year. It now hopes, though, that things are back to normal now the vote is out of the wa
2h ago 09:02
Here’s something to ponder…. according to the markets, the Bank of England won’t raise interest rates for another 66 months!
That takes us all the way through to the end of 2021, or 14 years since the crisis began.
— Martin Enlund (@enlundm)
August 9, 2016
Bank of England will hike!
In ~70 months.
2h ago 08:47
BoE policymaker: We could ease policy again
One of the Bank of England’s policymakers has also undermined the pound, by predicting further interest rate cuts soon.
Writing in The Times, Ian McCafferty says:
“If the economy proves to have turned down in line with the initial survey signals, I believe that more easing is likely to be required, but that can easily be delivered in coming months.”
McCafferty voted in favour of last week’s rate cut to 0.25%, but opposed the Bank’s new £60bn quantitative easing scheme. That makes him a relatively hawkish member of the committee.
Updated at 9.07am BST
2h ago 08:36
Here’s Jill Treanor’s story on the latest push to improve Britain’s banks:
Watchdog demands banking overhaul to save customers money
Measures aim to save people £92 a year in fees and charges but critics question if it is enough to break top banks’ stranglehold
2h ago 08:26
UK gilt yields hit record low
Oh wow, Britain’s borrowing costs have just hit a new record low.
10-year UK gilts are changing hands at a yield of just 0.592%, down from 0.609% last night.
— Christophe Barraud (@C_Barraud)
August 9, 2016
#Brexit | #UK 10-YEAR GILT YIELD DROPS TO RECORD LOW OF 0.592% – BBG
This makes it an excellent time to boost government borrowing to fund infrastructure projects….
2h ago 08:18
No-one will be surprised to hear that Germany has posted another whopping trade surplus.
German firms exported €106.8bn of goods in June, while the country imported £82bn. That leaves Berlin with a surplus of €24.9bn, up from €23.9bn in May.
The FT has more details:
Exports to the EU accounted for the biggest growth in June – rising 2.3 per cent to his €62.7bn in the same month Britain went to vote on membership of the bloc.
Imports from the EU to Germany rose 3.3 per cent, while the country’s trade balance with the eurozone narrowed as imports (3 per cent up) outstripped a 0.1 per cent rise in exports.
3h ago 08:14
The pound is falling because traders fear bad news at 9.30am, reckons Connor Campbell of SpreadEx:
Courtesy : theguardian.com