The latest figures, published yesterday, showed an improvement in June, with the deficit in that month put at pounds 764m compared with pounds 1.2bn in May. Officials said this was mainly attributable to movements in erratic items such as precious stones and aircraft.
Leaving aside oil and erratics, the deficit in the first half was pounds 10.5bn, which was only partly offset by a surplus on trade in services of pounds 2.7bn.
The overall picture confirms the fears of exporters over the strength of the pound. But exporters also face other problems in different markets: exports to the European Union, where economic activity is gaining strength, were up by 2.5 per cent in the latest quarter, while exports to the rest of the world fell by 3.5 per cent. Officials attributed this to the economic crisis and slowdown in Asia.
Similarly, imports from EU countries were higher, while those from elsewhere in the world were down.
The breakdown of exports showed that only finished manufactures and fuel increased, while all other commodity groups fell. On the import side, there were increases across the board, apart from basic materials. Figures for July are only available for non-EU countries and showed little change from June.
If present trends continue, the deficit in goods and services is heading toward pounds 12bn for 1998 as a whole. The Treasury forecast for the year is a current account deficit of pounds 6.5bn after including invisible items such as overseas profits.
Current account totals for the second quarter are due next month.Reuse content