Exports yet to gather pace
Jul 09 2010
The UK's trade deficit widened in May, knocking hopes that an export-led recovery is gaining momentum.
The total trade deficit widened to a 22-month high of £3.8 billion in May as exports rose 1.8 per cent month-on-month and imports rose by 2.4 per cent. UK exports of traded goods to the Eurozone fell by 0.6 per cent month-on-month.
Howard Archer, chief economist at IHS Global Insights, says: ‘Another month, another set of disappointing trade data. Exports are just not picking up as much as has been hoped for; indeed, they are lagging the growth in imports.
‘There are growing concerns that UK exports will be hit significantly by slower growth in the Eurozone due to the region's sovereign debt crisis and the associated intensified tightening of fiscal policy in a number of countries. But on the bright side, faster rising imports points to some pick up in UK domestic demand.’
David Kern, chief economist at the British Chambers of Commerce, says that the pace of expansion is inadequate: ‘Since exports must be put at the centre of any lasting UK economic recovery, it is important to nurture companies trading abroad. Businesses need improved access to short-term trade finance and they may have to look to other global markets outside Europe for an export-led boost.’
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