The pound drops as UK trade deficit widens to £10.5bn

 
Caitlin Morrison
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New Cars Imported From The EU Wait To Be Delivered
Car imports helped drive up the total import value (Source: Getty)

The UK's trade deficit widened in the first quarter of 2017, and in March, the Office for National Statistics (ONS) said today.

In the first quarter of the year, the deficit, which includes goods and services, widened by £5.7bn compared to the final quarter of 2016, from £4.8bn to £10.5bn. The ONS said this was mainly due to a 3.3 per cent rise in import values, particulary in imports of oil, chemicals, mechanical machinery and motor vehicles, and a 0.5 per cent drop in export values during the quarter.

The trade deficit widened by £2.3bn in March compared with February, on 5.6 per cent growth in import values versus 1.3 per cent growth in export values.

Sterling dropped 0.18 per cent after the data was released.

Trade prices continue to move with recent movements in exchange rates, the ONS said. Goods export and import prices rose by 1.5 per cent and 1.4 per cent respectively in March compared with February, coinciding with sterling depreciating by 1.3 per cent against a basket of currencies.

Howard Archer at IHS Markit commented: "In value terms, exports of goods and services disappointingly fell 0.5 per cent quarter-on-quarter in the first quarter while imports were up 3.3 per cent quarter-on-quarter. This suggests that net trade was negative in the first quarter and weighed down on UK GDP in contrast to making a major positive contribution in the fourth quarter of 2017."

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