HOPES of an export-led recovery were dealt a minor blow yesterday, as the UK’s trade deficit was shown to have widened in March.
The deficit in goods and services grew to £3bn in March, from £2.7bn in February, while visible exports fell by 3.4 per cent compared to February.
Services exports continued to grow, however, with the UK’s surplus on services coming in at £4.7bn, £400m higher than the previous month.
“Despite March’s drop in export volumes, UK exporters are relatively upbeat, particularly as there is now some evidence of a rebound in demand for UK products in the US,” said Kah Chye Tan of Barclays Corporate.
Despite March’s setback, the UK deficit still narrowed across the first-quarter of the year, and exporters have become more confident going into the second-quarter according to a survey by Travelex.
“Interest rates play a strong role in determining the strength of currencies and we can clearly see this playing out in April,” said Travelex director David Sear.
“Not only has the European Central Banks’ hawkish approach hugely supported the euro, it has also energised UK exporters.”