Rising European exports improved the UK’s trade gap in November, but a significant improvement in the trade deficit still looks a long way off, experts warned today.
Figures for November showed the nation’s goods trade deficit with the rest of the world narrowing from £9.7 billion in October to £9.4 billion, helped by a 2.5% rise in export volumes outstripping import growth of 0.6%. Export volumes to the EU rose 5.8% on the month as sales were boosted by factors including chemical products exported to Germany.
But imports from the EU are also at a record high and less-volatile quarterly figures show EU exports down more than 5% in the three months to November. The UK’s total trade deficit of £3.2 billion was also far higher than expected after revisions to previous estimates, while a recovery at home is likely to see import demand soar, economists said.
Simon Wells, chief UK economist at HSBC, said: “Given that the recovery in domestic demand is likely to continue through 2014, and in particular that surveys suggest investment may bounce back, this deficit is worrying. Investment is import-intensive and so strong import growth is likely.”
