Surprise import surge worsens trade deficit

BRITAIN'S trade with other countries unexpectedly slipped deeper into the red last month, as imports grew more quickly than exports, despite the depressed state of consumer and business spending.

The Treasury hailed the rise in imports as evidence that the economy was starting to turn round. But longer-term trends show that import growth has been slowing over the past year, while exports have been subdued by weakness in the US and German economies.

The deficit on trade in 'visible' goods was pounds 1.13bn in July, compared with pounds 947m in the previous month, according to the Central Statistical Office. The City had expected the trade gap to narrow to about pounds 900m.

The deterioration was exacerbated by trade in oil - which showed its smallest surplus since August 1990 at pounds 19m - but flattered by unusually depressed aircraft imports. Excluding oil and erratic items, which also include precious stones and ships, the trade gap widened by pounds 172m to pounds 1.36bn. This was the second largest underlying trade deficit since August 1990.

Including a pounds 200m projection for the surplus in trade on 'invisible' goods, such as insurance and tourism, the estimated current account deficit grew by pounds 187m to pounds 934m. The cumulative current account deficit for the first seven months of the year is estimated at pounds 6.4bn, compared with the Treasury's Budget forecast of pounds 6.5bn for the year as a whole.

Exports were virtually unchanged on the month at pounds 8.8bn, while imports rose by pounds 226m to pounds 9.95bn. The volume of exports, excluding oil and erratics, was 2 per cent higher in July than a month earlier, while import volume rose by 2.4 per cent in the same period. Comparing the three months to July with the previous three months shows both import and export volumes increasing by 1 per cent, although import growth has been slowing in recent months.

The volume of imports of capital, intermediate and consumer goods were all higher in July than in the previous month.

'The three-month comparison suggests there has been no great post-election surge in import spending, which would have begun to feed through by now', said Ian Shepherdson, economist at Midland Montagu. 'Export growth has been depressed, but helped marginally by the weaker pound.'

Economic weakness in Britain's European markets has been reflected in slower growth in exports to the European Community. Exports to Eastern Europe and the former Soviet Union are rising quickly, but from a low base.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
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: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee