LONDON: Britain’s trade deficit with the rest of the world fell more than expected in April after a record jump in goods exports.
The boost for George Osborne before the EU referendum was magnified after figures showed the growth in exports over the past year was mainly to the rest of the EU, with only a small rise in sales to the rest of the world.
Exports of British-made goods to the EU increased by 10.3% compared with a year ago and non-EU exports nudged just 1.9% higher. Exports to the rest of the world performed better in April after a £1.3bn jump to a record £14bn compared with a £900m rise in exports to the EU. UK trade deficit with EU hits new record
The trade deficit in goods fell to £10.5bn from a downwardly revised £10.6bn in March, according to the figures from the Office for National Statistics. The total trade deficit, including services, narrowed to a seven-month low of £3.3bn in April from a downwardly revised £3.5bn in March and a peak of £5.2bn in January.
The increase in exports to the EU follows a steady rise in growth across the 28 member states, at a time when emerging economies have struggled to maintain their stellar economic expansion of the past 20 years and previously fast-growing countries Russia, Brazil and South Africa have slumped into recession.
It also eases concerns after last month’s figures showed Britain’s trade deficit with other EU countries was running at a record high. The gap between exports and imports during first three months of 2016 widened £0.7bn to £23.9bn.
Zach Witton, deputy chief economist at EEF, the manufacturers’ organisation, said the data provided some encouragement that the UK’s export performance was improving, “backing up recent signs that Europe’s economic recovery is gaining momentum, while global growth may be starting to turn a corner”.
He said it was also possible that the recent weakness of sterling may be providing some support for exporters, though there was still “a long way to go to reach the government’s export target of £1 trillion annually by 2020”.
Howard Archer, chief economist at IHS Global Insight, said the figures gave hope that the overall weakening of the pound since late-2015 could be feeding through to help UK exporters.
“Along with the jump in industrial production in April and decent retail sales growth, the trade data suggests UK GDP growth could be holding up better in the second quarter than has been thought – despite the heightened uncertainty,” he said.
