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Britain's Trade Deficit Hits Record High in July

Strategic Insights

— 1 min read

Despite a record high trade deficit in July, caused by a fall in exports, provisional figures for August suggest that exports have rebounded. The widening trade deficit was mainly due to weak trade with countries outside the European Union, but estimates show that exports have now cut the deficit to £2.4 billion. Export volumes showed rapid annual growth of 10.3 per cent in August, with analysts predicting that monthly trade deficits will remain high but not deteriorate significantly.

Key Takeaways:

  • Britain's trade deficit hit a record high of £3 billion in July, largely due to a fall in exports.
  • The shortfall on visible trade was £3 billion, up from £2.4 billion in June, according to National Statistics.
  • The widening deficit was mainly due to weak trade with countries outside the European Union, with the shortfall rising to £2.7 billion from £2.1 billion.
  • Provisional estimates for August trade with non-EU countries showed that exports had rebounded, cutting the deficit to £2.4 billion.
  • Underlying figures for export volumes showed rapid annual growth of 10.3 per cent in August.
  • Analysts believe that monthly trade deficits will remain high, but do not anticipate a significant deterioration in the months ahead.
  • Neil Parker, of Royal Bank of Scotland, attributed the robust growth in the eurozone as a factor supporting export volumes.
  • Jonathan Loynes, chief UK economist at Capital Economics, stated that the trade position continues to hold up surprisingly well, given the exchange rate.

Statistics:

  • Record high trade deficit in July: £3 billion
  • Shortfall on visible trade in June: £2.4 billion
  • Shortfall on visible trade in July: £3 billion
  • Trade deficit with non-EU countries in July: £2.7 billion
  • Trade deficit with non-EU countries in August: £2.4 billion (provisional estimates)
  • Annual growth in export volumes in August: 10.3 per cent
  • Slight fall in Britain's surplus on services in July: £850 million (down from £869 million in June)

Sources:

  • The Times
  • National Statistics
  • Royal Bank of Scotland
  • Capital Economics

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