Treasury claims success in rebalancing UK economy as trade deficit shrinks

 

The trade deficit fell to £1.9bn in August, according to the Office for National Statistics, prompting the Government to argue that the British economy is finally rebalancing.

New figures from the ONS showed that the trade in goods deficit fell to £7.8bn, down from £8.2bn in July. Britain's surplus on trade in services was unchanged at £5.9bn. The overall fall in the trade deficit was driven by a 1.3 per cent increase in the volume of exports. Imports also grew, but at a slower rate of 0.3 per cent. The value of goods exports hit a record high of £25.5bn.

The Treasury argued that the figures show that Britain is creating a "new model" of export-driven growth. A spokesman said: "Today's figures show a continued strengthening of the UK's trading position. The Government is creating a new model of economic growth that is driven by investment and exports." Alan Clarke of Scotia Capital suggested the next UK growth figures could be boosted. He said: "It's a decent improvement on the month and may yet help to give us a decent third quarter GDP."

Yet many analysts were sceptical of the notion that the lower than expected trade deficit figures represent an economic turning point and warned that the ongoing eurozone crisis is likely to squeeze demand for British exports in the months ahead. Howard Archer of IHS Global Insight said: "Severe concerns persist about the prospects for exports in the near term, at least given recent weakened global economic activity and the current worrying growth prospects."

And some leading indicators cast doubt on the idea that Britain is experiencing an export boom. A survey of manufacturing purchasing managers has indicated that export orders contracted for a second successive month in September, and at the fastest rate since May 2009. Fuels and engineering parts were mostly responsible for the rising level of exports in August. Car exports were down by £300m.

The US trade deficit also narrowed to $45.61bn (£29.1bn) in August, down from $45.63bn in July, according to figures released yesterday by the Commerce Department. However, US imports from China reached a record high of $37.4bn.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk