It’s been a funny 24 hours, hasn’t it? The UK has had good news from the tennis and good news on the economy. Unusual, particularly in the latter’s case, where the news may appear better than it actually is. Figures from the Office for National Statistics released today show the UK’s trade deficit narrowed to £1.5 billion in July from a £4.3 billion deficit in June.
There was a 9.3 per cent rise in exports of goods to £25.8 billion, and a 2.1 per cent drop in imports by £700 million to £32.9 billion.
Before everyone gets too excited, though, the dramatic rise is partly down to June’s figures being so terrible after the disruption caused by the Queen’s Diamond Jubilee bank holiday. Capital Economics’ Martin Beck urged caution when the figures were published, saying:
‘This is unlikely to herald the start of the long-awaited rebalancing of the economy towards the external sector.’
What is also interesting to note is that goods exports to non-EU countries are thriving, with the deficit on trade with those countries decreasing by £2.2 billion to £2.9 billion, while the deficit on trade for EU countries only fell by £700 million. And the proportion of exports to the EU is now at an all-time low of 48.7 per cent, and at 43.6 per cent for the eurozone. It shows the continuing weakness in the euro area, but also suggests the UK is continuing to make progress in more buoyant markets than with its traditional European Union trading partners.