Brexit latest: No sign of major export boost from sterling depreciation

Exports were up 4.6 per cent in October, but over the quarter they were only 1.8 per cent higher despite the 15 per cent decline in sterling since June

The trade deficit for Q3 2016 has been revised up (Getty)

The slump in sterling since the Brexit vote is – so far – not translating into a major boost for exports, the latest data from the Office for National Statistics shows.

The trade-weighted value of sterling is down around 11 per cent since the June referendum.

The ONS reported today that exports were up 4.6 per cent in October, but over the quarter they were only 1.8 per cent higher.

Awaiting the surge

Imports were up 5 per cent over the same period.

“There remains only limited evidence so far that the depreciation of sterling has led to a marked increase in UK exports,” said Hannah Finselbach of the ONS.

Suren Thiru, head of economics and business finance at the British Chambers of Commerce, said that while some firms benefited from the lower exchange rate many others were being hit by higher import costs.

He added: “The UK’s attempts to make sustained progress in turning its export performance around continues to be hampered by sluggish world trade growth in recent years.”

However, the ONS also reported that the UK’s trade in goods deficit declined to £9.7bn in October, down from £13.8bn in the previous month and against City analysts’ expectations of a £11.8bn gap between export and import values.

The overall trade deficit – including the UK's large traditional services surplus – was £13.2bn in the three months to October, up from £8.5bn in the same period of 2015.

Earlier this week the ONS said it had uncovered a “processing error” in the compilation of its balance of trade statistics relating to the trade in gold dating back to the beginning of 2015.

This meant that the 2015 current account deficit was revised down from 5.4 per cent of GDP to 5 per cent.

Yet the trade deficit for the third quarter of 2016 was revised up by £3.9bn to £14.9bn.

This was the largest deficit since the final quarter of 2013.

The ONS estimates that net trade made a positive contribution to overall GDP growth in the third quarter of the year, mainly thanks to a 1.5 per cent fall in exports.

Net trade knocked 0.4 per cent off GDP growth in 2015, according to the ONS.

Some analysts were more optimistic that trade would improve.

“The recent marked rise in survey measures of export orders suggests that export growth will pick up in the coming months. This should help support GDP growth and ensure that the trade deficit narrows in the coming quarters,” said Scott Bowman of Capital Economics.