By Claire West
The UK’s trade deficit widened to £8.7 billion in July, according to the Office for National Statistics, with imports at their highest level in two years. Sterling fell to $1.5386, more than 0.1 per cent against the dollar, in response to the data.
Economists were surprised by the figures, as most had forecast it to only widen to £7.5 bn. Imports rose 3.1 per cent and exports fell 0.9 per cent, as purchases of chemicals and oils drove imports up.
Paddy Earnshaw, Customer Director at Travelex Global Business Payments says, “UK exporters have told us that the weak pound is having no effect on their business and the latest trade figures confirm that. They are very disappointing. It seems that the pound’s continued volatility makes it difficult to drive an export led recovery.”
The Travelex Confidence Index, a measure of importers and exporters confidence, showed that confidence in an export led recovery fell for the second consecutive month in August. Only 42% of the UK’s importers and exporters now believe that a weak pound will facilitate an export led recovery.
Earnshaw comments, “The onus is on UK manufacturing to distinguish itself through quality, innovation and differentiation, as it is clear a weaker pound cannot drive exports alone.”