Exports fell 2.1 per cent in August, stamping out hopes of a helpful surge in the UK recovery. Along with a fall in exports, imports suffered a setback as well. This caused a tightening of the trade balance to 4.6 billion pounds and narrowed the global trade gap to 8.23 billion pounds.
Howard Archer, chief economist at IHS Global Insight, commented on how the August figures affected the recovery, saying: “Signs of net trade riding to the rescue of the UK economy remain conspicuous by their absence.”
The eurozone exporting figures remained strong, gaining 1.3 per cent, while exports to non-EU countries disappointingly fell by almost five per cent.
David Kern, chief economist at the British Chambers of Commerce, remarked on the impact of the August figures, saying: “It is disappointing that exports fell slightly, but imports fell even more, and overall the result was an improvement in the net trade position.
“While this is positive, the improvement this year is by no means sufficient, and it is critical that the relatively strong manufacturing figures we have seen recently should be translated into a much stronger trading position.
“With the forthcoming spending cuts set to dampen domestic demand, the UK economy risks declines without significant growth in our net exports.”
Andrew Goodwin, advisor to the Ernst and Young ITEM organisation, commented on the impact to short term as well as long term growth, saying: “Most worrying is further evidence that exports are leveling off, having recovered strongly over the first half of the year,” he said. “This is consistent with the weaker data on export orders from recent business surveys and reflects a softening in global demand. There has been a notable drop-off in demand from our key export market, the European Union.
“We appear to be entering a soft patch for global growth, with major question marks over short-term growth prospects in both the US and eurozone. We expect these to be overcome but only after a period of subdued growth through the winter.”
The trade deficit in the UK now stands at 13.2 billion pounds – the largest since records began.