THE UK’s trade deficit narrowed slightly, official figures showed yesterday, but imports fell by twice as much as export, suggesting a softening of domestic demand.
The trade deficit fell to £4.6bn in August, falling back from a five-year high of £5bn in July.
While there was an improvement in the UK’s net trade position – the deficit narrowed to £8.2bn in August compared with £8.7bn in July – exports fell by £0.4bn and imports fell by double that at £0.8bn. The volume of imports was 1.5 per cent lower than a month ago.
The UK’s trade deficit with EU countries narrowed to £3.5bn in August, compared with a deficit of £4bn in July. Exports rose by £0.1bn but again imports fell by £0.3bn.
The deficit with non-EU countries was £4.7bn in August, unchanged from July. Exports and imports both fell by £0.5bn compared with the previous month, the ONS said.
Howard Archer, chief European and UK economist at IHS Global Insight, said signs of net trade “riding to the rescue of the UK economy remain conspicuous by their absence”.
Meanwhile David Kern, chief economist at the British Chambers of Commerce, said the fall in imports was a serious concern.
He added: “With the forthcoming spending cuts set to dampen domestic demand, the UK economy risks declines without significant growth in our net exports.”