The UK’s imports significantly outstripped exports in June, leading to the biggest trade deficit this year, new data shows.
The trade gap widened to £4.5bn in June, from £4bn in May after exports dropped 2.8 per cent and imports fell just 1.5 per cent.
UK domestic demand for traded goods fell five per cent in June, leading to slowing imports – but export volumes also fell 4.4 per cent, causing the goods trade deficit to widen to £8.9bn from £8.5bn.
On a quarterly basis, imports fell just 1.7 per cent while exports declined by 4.4 per cent, however.
Economists warned that the slowdown in trade looked a result of the global downturn and weakened the chance of trade being a driver of UK economic recovery.
“Hope of a sustained markedly improved net UK trade performance is being hampered significantly by slowing global growth. This is countering the benefits of a competitive pound,” said Howard Archer, IGH Global Insight chief economist.
Scott Corfe, economist at the Centre for Economics and Business Research, said: “With economic turbulence continuing in the Eurozone amidst the ongoing sovereign debt crisis, there is a real risk of UK export demand failing to grow substantially over the coming years despite the relatively weak value of sterling. Ultimately this could make for a very slow recovery.”