The latest trade in goods data demonstrates a weakening trade performance of the UK with the United States, the nation’s largest single-country export partner.
In Q1 and Q2 2022, the UK imported £15bn – a quarterly record – and £13.8bn worth of goods from the United States as imports bounced back from a pandemic-induced dip in 2020 and 2021, and fuel imports shot up.
In contrast, exports are yet to return to their pre-pandemic levels and reached just £11.9bn and £13.1bn through the same quarters, the data shared by financial services firm Ebury showed this morning.
It marks a trade deficit of £3.1bn for Q1, the largest negative goods gap with the US ever recorded, and £0.7bn in Q2 which marks the first time the UK has recorded a negative balance since Q2 2011, and the first time the UK has recorded two consecutive quarters of deficits since 1998.
Rising imports of fuels were a key driver of the goods deficit with figures recording imports of £6bn and £4.6bn in Q1 and Q2 2022 respectively compared to £1bn and £1.4bn in the comparative quarters a year earlier.
Discussing the figures with City A.M. this morning, Jack Sirett, head of dealing at Ebury, said a strengthening US dollar against the sterling was likely to increasing the cost of importing from the US and ramping up inflationary pressures in the UK.
“The goods trade deficit figures with the United States this year are unprecedented.”Jack Sirett
“The opening quarter to the year represented the largest ever deficit, and two consecutive quarters of trading goods in deficit has not been recorded since the start of the Millennium,” Sirett noted.
“Evidently, the devalued pound against the dollar this year has bumped up the value of imports from the US.”
He said that “we have also seen more businesses eyeing up the North American market with the EU representing a less attractive market in the wake of Brexit, while supply chain issues and shipping costs have seen imports from China dip too.”