Export firms struggle as hope fades for recovery

A further plunge in exports saw the UK rack up its second-biggest trade deficit on record, official figures show.

The deficit in goods and services, the gap between exports and imports, grew to £4.2bn in August from £1.7bn in July, the largest since April, the Office for National Statistics (ONS) said.

The deficit in goods alone widened to £9.8bn from £7.3bn the previous month as exports to EU countries and non-EU countries fell 0.5 per cent and 7.2 per cent respectively.

Hide Ad
Hide Ad

Coupled with downbeat manufacturing statistics, the figures cast further gloom over the economy’s growth prospects in the third quarter and beyond as analysts warned that any recovery is unlikely to be sustained.

Victoria Clarke, economist at brokers Investec, said: “UK exporters continue to face challenging market conditions, particularly in exporting to EU destinations but globally too.”

The figures are a further blow to Chancellor George Osborne who is relying on the economy shifting towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching public sector spending cuts.

Imports of goods increased by £1.5bn, or 4.5 per cent, from £33bn in July to £34.5bn in August, the ONS said.

Hide Ad
Hide Ad

But the increase in the import of goods reflects higher imports of fuel which was up £1bn, specifically of oil which rose by £900m.

The gloomy figures follow a downbeat assessment from the International Monetary Fund, predicting that the economy would shrink 0.4 per cent this year.