THE BRITISH trade deficit widened during May despite an increase in both exports and imports, according to concerning figures published yesterday.
The gap between exports and imports rose to £2.4bn in May, up from £2.1bn in April, official statistics showed. The UK’s services surplus, at £6.8bn, was well short of making up for a £9.2bn deficit in goods.
“Net trade will likely find it difficult to make a sustained, significant positive contribution to UK growth in the near term at least, given muted domestic demand in the Eurozone and the strength of sterling,” said Howard Archer, chief UK economist at IHS Global Insight.
“Meanwhile, imports are likely to be supported by robust UK domestic demand,” he added.
Despite the strength of the pound, exports of goods are on the increase, up by 0.6 per cent in the month to May, but are being outstripped by import demand. Inward trade rose by 1.7 per cent in the same period, attributed to a particularly large bump in aircraft purchases.
Trade with the rest of the EU is a particular drag on the UK’s overall performance. Exports of goods dropped by 0.2 per cent to £12.2bn, while imports rose by 1.6 per cent to hit £17.4bn.
“It is concerning to see the trade deficit widen again in May 2014. Although long-term trends show a gradual improvement in our net trade position, the progress made in the first quarter of 2014 has been halted,” said British Chambers of Commerce (BCC) chief economist David Kern.
He continued: “Today’s figures confirm that the pace of the UK’s rebalancing towards net exports is far too slow, and if this continues we risk missing out on the Prime Minister’s target of increasing exports to £1 trillion by 2020.”