British car exports hit record high in third quarter - but pound falls as trade deficit widens further

 
Sam Layton
Car exports hit a record high - but the UK's trade gap widened to a worrying level (Source: Getty)

British car exports are at a record high, the Office for National Statistics (ONS) said today.

Exports of cars made in Britain rose by £800m to £23.6bn in August - and that didn't even take into account any impact from the Volkswagen emissions scandal, which broke in mid-September and has hit German exporters where it hurts.

In less encouraging news, though, the overall UK trade deficit widened by £1.2bn to £3.3bn from last month, causing the pound slump to $1.5346.

Combined figures with a disappointing report in July, the August figures doubled the total trade deficit in the second quarter.

The £11.1bn deficit in the third quarter was a shock for forecasters who had expected a £9.9bn figure. The figures are a sign that slowing global growth and a strong pound take their toll on British businesses.

Although the UK economy expanded by 0.7% in the second quarter, growth is expected to slow in the final three months of the year.

“The July trade release had been dire so there was always a good chance that there would be some payback in the August data," said Martin Beck, senior economic adviser at the EY Item Club.

"However, the scale of the rebound was underwhelming, with the trade deficit narrowing from £4.4bn in July to £3.3bn in August; this kept it much wider than the average of the past six months (-£2.5bn).

"The monthly data has been hugely volatile lately, with July’s collapse in goods exports being followed by a rebound in August. But the underlying picture is one of a weakening export performance, with the official data moving closer to the story that has been conveyed by business surveys for some time."