Export slump sets back recovery hopes
Friday 10 August 2012
A dramatic export collapse left the UK with a huge £10.1bn goods trade gap in June, dealing a blow to the Bank of England's hopes for a rebalancing of the economy.
The gloomy figures follow Governor Sir Mervyn King's warning this week that efforts to shift the nation towards exports and investment "will require patience".
The widening of the goods deficit from £8.4bn in May was far bigger bigger than feared in the City, although the Jubilee bank holiday is likely to have affected the data.
Attention has focused on the travails of the eurozone – the country's biggest overseas market – but worryingly for the Bank, an even bigger hit came from dwindling sales to non-EU countries. Exports sank 9.6 per cent as sales of cars – mainly to China – fell £200m, while oil exports slumped by almost £1bn for the month.
The UK's combined goods and services gap also grew to £4.3bn, the biggest since official records began in 1997. Over the three months to June, the total trade deficit widened to £11.2bn, further dragging on an already weak economic recovery.
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