Surging exports halve Britain's trade deficit
Exports are still showing no signs of being held back by the strong pound, according to official figures. Unless export growth slows soon, interest rates are likely to rise again, reports Diane Coyle, Economics Editor.
Friday 26 September 1997
"Despite the chorus of gloom and doom from industry, exports are holding up well to say the least. Even if they start to slow, I would be amazed if we do not get another rise in interest rates," said Michael Dicks, UK economist at investment bank Lehman Brothers.
Figures for trade with countries outside the European Union in August showed that the shortfall rose to pounds 359m from an unusually low pounds 62m in July, but it remained well below its average during the previous few months.
Taking out erratic items such as oil rigs and precious stones, the picture was less favourable, with the underlying deficit climbing by nearly pounds 300m to pounds 1.2bn in July. Even so, underlying growth in export volumes has continued to outstrip import growth.
In the latest three months exports have climbed 3.5 per cent and imports only 1.8 per cent. Both exports and imports are at near-record levels in underlying terms.
Most economists have been predicting that the strong pound would worsen the trade position enough to slow down the economy's overall growth and avert the need for the Bank of England to raise borrowing costs again. But with figures earlier this week showing that growth last quarter was higher than first estimated, yesterday's trade figures suggest the economy could also expand more than expected this quarter.
Even experts who reckon talk of a booming economy has been overdone admit that the latest trade position increases the risk that the Bank of England will take more action. "There is just not that much evidence of the strong pound hitting exports. You can't yet signal the all-clear on interest rates," said Eric Fishwick of Nikko Europe.
The pound rose as a result yesterday. It gained more than a pfennig to just under DM2.88, while its index against a range of currencies rose 0.8 to 101.1.
However, the surprisingly good news does not mean Britain's export performance will not suffer as a result of the 17 per cent rise in the pound in the past year. "Exporters are not cutting prices fast enough to prevent some weakening in the trend in the months ahead," said Kevin Darlington of ABN-Amro.
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Emergency call 'started off dumb, but got pretty serious'
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Axe wielding man shot dead after attacking four New York policemen on busy street
This 'woman calls police to order pizza' story isn't going where you're expecting
Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...