British exports are recovering

BRITAIN’S trade gap narrowed in June as exports recovered, but economists warned overseas demand would not offset the flagging economy at home.

Exports increased at four times the pace of imports in June, narrowing the trade in goods deficit from £8bn in May to a lower-than-expected £7.4bn, the Office for National Statistics said.

The overall trade gap, which includes services, fell to £3.3bn in June, compared to £3.8bn a month earlier.

The figures will provide some cheer for the coalition government, which has staked its reputation on bringing about a private sector, exports-led recovery.

But economists greeted the figures with a note of caution, warning that one positive set of

numbers did not necessarily mean exports would hold up in the long term.

The British Chambers of Commerce (BCC) welcomed the news but warned exporters against complacency.

“This is good news but there is no room for complacency. The UK is still running a large trade deficit and the challenges facing exporters are substantial,” said David Kern, chief economist at the BCC.

Vicky Redwood of Capital Economics was even more pessimistic, pointing out that the narrowing trade gap did little more than reverse May’s sharp widening in the deficit.

“We continue to doubt that any trade boost will be big enough in the near-term to offset the effects of the severe fiscal squeeze on consumers and the domestic economy,” she added.