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.
- 1 'Not suppost to cry': 9-year-old lists the worst things about being a boy
- 2 Lee Evans announces his retirement from comedy on The Jonathan Ross Show
- 3 Iggy Azalea responds to Eminem rape lyrics: 'I'm bored of old men threatening young women'
- 4 These grandmas smoking weed for the first time are wonderful
- 5 Pastafarian former porn star Asia Lemmon allowed to wear colander in driving licence photo
Duchess of Alba dead: Billionaire Spanish duchess who lived life by her own rules, dies at 88
New York snowstorm: Death toll rises to 10 as residents battle with further snowfall
These grandmas smoking weed for the first time are wonderful
Chelsea balcony collapse: Two people dead and six injured in London
Woman opens professional cuddling shop – gets 10,000 customers in first week
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
Revealed: How the world gets rich – from privatising British public services
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...