So much for the great rebalancing. Last month's trade figures showed the UK trade deficit narrowing in August to £1.9bn, down from £2.3bn in July. The Treasury said that this showed that "the Government is creating a new model of economic growth that is driven by investments and exports".
That claim now looks premature, if not simply wrong. The ONS has revised up its estimate of August's trade deficit to £2.7bn, which means that there wasn't a narrowing in that month at all. And September's figure is still worse, up to £3.9bn. Exports are weak and imports are up. That is most certainly not what the Treasury hoped to see. So how depressing is it?
No one really doubts that Britain has benefited from being outside the eurozone in recent years. Our economic adjustment has been facilitated by a devaluation of the pound, which makes our exports more competitive. Italy, Greece and others would be grateful for such a safety valve. But the real worry for George Osborne is that a 20 per cent depreciation in the value of sterling has not delivered a much bigger boost to our exports. Being outside the single currency is clearly no economic panacea.