EXPORTS beyond the European Union helped narrow the UK’s trade gap to £2.4bn in February, in from £3.9bn in January.
The deficit in visible goods traded fell by £1bn in the month, to drop to £6.8bn – its lowest rate for a year, surprising economists.
Within the EU, exports from the UK actually fell by £0.6bn (4.4 per cent) from January to February. Yet exported goods to non-EU countries soared by £0.9bn, while imports from outside the EU dropped by £0.5bn.
Overall the trade deficit with countries outside the EU dropped from £4.2bn in January to £2.8bn in February.
“A further narrowing of the goods trade deficit, on top of January’s robust data, is confirmation of the recent strong export trends,” said Nida Ali of the Ernst and Young Item Club.
“And what is even more encouraging is an increase in the surplus on services – this is traditionally an area of strength for the UK, but services exports have consistently disappointed over the past year,” Ali said.
Services grew to a £4.3bn surplus in February, up from £3.9bn in January.
Excluding volatile components such as oil, the volume of exports rose 2.9 per cent in the month, while imports were 3.2 per cent lower.
“Moreover volume trends show exports expanding by 5.1 per cent over the past three months, against 1.6 per cent for imports, supporting the ‘economic rebalancing’ story,” commented Investec’s Philip Shaw.
“This does not quite represent an economist’s nirvana, but today certainly does represent one of the UK’s better days,” Shaw concluded.
“Trade is on course to boost first-quarter GDP growth by 1.25-1.5 percentage points in the first quarter,” added Henderson’s Simon Ward, “further evidence that the economy has bounced back solidly in early 2011 despite high-street weakness.”