New blow to UK economy as trade gap widens to record level
'Awful' data cannot be blamed solely on Queen's Diamond Jubilee, say analysts
HOPES THAT Britain might be able to export its way out of recession took a hammer blow today after it was revealed that the UK trade deficit has ballooned to its widest since modern records began in 1997.
The Office for National Statistics said the gap between imports and exports increased from £2.7bn to £4.4bn in June. There was a sharp 7.4 per cent drop in exported goods.
The Guardian points out that the trade gap over the whole of the second quarter (April-June) confirms the grim picture. In this period the deficit increased from £7.8bn to £11.2bn, which is enough to wipe one per cent off economic growth.
While the eurozone debt crisis hasn't helped the UK's exporting industries, much of the fall in demand is down to non-European Union countries.
Exports of traded goods to EU countries fell by 7.2 per cent month-on-month in June, but they were down by 9.2 per cent to non-EU countries. The figures lay bare the difficulty Britain is having tapping into trade with emerging markets such as India and China, notes Sky News.
While some observers have blamed the extra bank holiday during the Queen's Diamond Jubilee for the poor figures, most say there are other factors at work.
Chris Willliamson of Markit said: "The fall could perhaps be in part blamed on the disruption to shipments caused by extra holidays for the Queen's Jubilee, but there is clearly an underlying trend of worrying weakness in overseas demand."
Vicky Redwood, an analyst at Capital Economics, was quoted by the BBC as describing the data "awful".
She added: "If the bank holiday halted work at ports, it should have affected both imports and exports. And previous extra bank holidays have not had that big an impact on the overall deficit."
David Kern, chief economist at the British Chambers of Commerce, called for more help from the government: "British exporters have untapped potential to expand, but they need more government support to help them compete globally and diversify towards growing markets outside the EU."