Widening in Britain’s trade deficit in September due to surging imports
A SURGE in imports saw Britain’s trade deficit unexpectedly widen in September to £3.5bn from £2.2bn, raising the possibility that net trade probably contributed to the drop in GDP in the third quarter.
The UK’s deficit on trade in goods was £7.2bn in September while the surplus on trade in services fell to £3.7bn from £3.9bn in August.
Nonetheless, analysts said it was encouraging that the widening in the deficit was almost entirely down to the 7.5 per cent monthly rise in imports, while exports managed to post a 3.9 per cent rise. These figures suggested a strengthening in domestic demand and an improvement in UK exporters’ competitiveness, helped by the pound’s recent weakness.
But with net trade likely to have made a broadly neutral contribution to GDP growth in the third quarter, September’s UK trade figures put something of a dent in hopes that a stronger contribution from the external sector will help to fuel a robust recovery in the overall economy over the coming quarters, said Capital Economics’ Jonathan Loynes.