Exports to the EU dip but UK deficit shrinks
EXPORTS increased in March, official data showed yesterday, as UK trade with non-EU countries boomed.
The trade deficit in goods and services narrowed to £2.7bn in the month, down from £2.9bn in February the Office for National Statistics reported.
Services exports rose £0.2bn to £15.5bn while imports held at £9.6bn, leaving a surplus of £5.8bn.
Meanwhile goods exports rose £1.4bn, or 5.8 per cent, to £26.4bn and imports rose £1.4bn, or 4.2 per cent, to £34.9bn, leaving a deficit unchanged at £8.6bn.
However, the goods deficit with EU countries rose as imports increased £0.8bn to £17.6bn while exports stagnated at £13.2bn in the month.
The overall fall in the trade deficit came entirely from trade outside the EU, where goods exports jumped 12.1 per cent to £13.2bn and imports rose by four per cent to £17.3bn.
The rise in total exports was driven by chemical and pharmaceutical sales which jumped £0.2bn, in large part to the US and China, as well as car sales to the US, Russia and Germany.
Meanwhile oil added £0.7bn to British imports.
Analysts warned the weak state of the Eurozone remains a major risk to Britain’s economic recovery.
“The Eurozone crisis is hitting UK exports – the share of total goods exports sent to the area fell to 45.3 per cent in the first quarter, the lowest since data began in 1988,” said Citi economist Michael Saunders.
“The headwind for UK exports from weakness in Eurozone economies is now being compounded from by the rising pound,” he warned.