Aircraft send Britain's trade deficit soaring
A pounds 200m increase in aircraft imports - equivalent to two jumbo jets - took the headline trade gap to pounds 474m last month from pounds 238m in March. Non- EU imports reached a record level. Import volumes dropped 1.5 per cent in the three months to April, but prices rose 6.6 per cent, partly because the pound's weakness has raised the cost of imports in sterling terms.
Export volumes climbed 2.6 per cent in the same three months. But prices rose too, by 4.7 per cent, showing that British exporters are enjoying better profit margins as a result of the pound's decline.
Jonathan Loynes, an economist at HSBC Markets, said it was a matter of concern that exporters were looking for short-term advantage rather than using their improved competitiveness to boost volumes more. But Kevin Darlington, at Hoare Govett, said: ''Companies don't need the extra market share when exporting is so profitable.''
The underlying trade picture, excluding oil and erratic items such as the aircraft, improved last month. The deficit fell from pounds 375m in March to pounds 303m.
Underlying export volumes were only a fraction higher, while import volumes rose nearly 1 per cent. But export prices jumped 4 per cent last month, compared with a 1 per cent increase for import prices, making for a bigger increase in the value of exports.
Taking the latest three months together, for a clearer impression of the trends, the volume of exports was up in all categories except food, hit by lower shipments of beverages and cereals.
Imports of food rose, led by fruit and vegetables, fish and meat, but other broad categories of imports fell. In particular, imports of consumer goods were down, although imports of capital goods by industry were higher.
Oil produced a surplus for the fourth month running - the first time this has happened since early 1988.
According to the Central Statistical Office, the recent trend in the visible trade gap with non-EU countries is almost flat, although it would look better if not for a large and erratic shortfall in December.
However, Kate Barker, chief economist at the Confederation of British Industry, said: ''Both our surveys and all the anecdotal evidence paint a stronger picture for manufacturing exports than the official figures.''
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