Surprise import surge worsens trade deficit
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.
Revealed: Devastating impact of 'bedroom tax' sees huge leap in demand for emergency hardship handouts for tenants
Notes from a small island: Is Sealand an independent 'micronation' or an illegal fortress?
You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
Revealed: Eerie new images show forgotten French apartment that was abandoned at the outbreak of World War II and left untouched for 70 years
Chloe Johnson death: Family of five-year-old British girl who died in a pool at in Egypt's Sharm el-Sheikh resort 'angry' that more wasn't done to save her
- 1 Stoke City investigate 'religious abuse' after 'pig's head is found in Kenwyne Jones' locker'
- 2 Gove’s lesson: spare the comma, spoil the child
- 3 Grace Dent on TV: Extreme Couponing, My Strange Addiction, and Here Comes Honey Boo Boo, TLC
- 4 You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
- 5 Join Ryanair! See the world! But we'll only pay you for nine months a year
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...
£450 - £500 per day: Orgtel: Sourcing Manager - Banking - London - Up to £500p...
To be discussed at interview.: Queen Elizabeth's School: An experienced and ef...
£294.05 - £330.92 per day + 150 per day travel and accommodation: Orgtel: A le...