By Max Clarke
The UK’s monthly deficit for trade of goods and services, at £4.5 billion, remained unchanged in July
Trade in goods remained also remained unchanged, as demand for consumer imports remains muted in the face of squeezed incomes and businesses struggle to increase markets overseas.
In the UK, inflation is likely to remain above the Bank of England’s target for the next two years, as wage growth remains in the doldrums. The resultant lack of demand means that businesses’ only avenue for expansion lies overseas. Today’s figures, however, confirm that businesses are still failing to capitalise on this.
"The Office of National Statistics Trade figures, which have remained virtually unchanged for July are concerning, given that the UK and particularly SMEs (small-midsized enterprises) are highly dependent on foreign trade," commented Phil Couchman, CEO of DHL Express UK
"With favourable exchange rates and the maintenance of the 0.5% interest rate, we would encourage UK businesses to consider international trade as a means of expanding their marketplace into markets they may not have previously thought of.
"For example, Mexico - a key market for manufacturing, specifically in the automotive sector - is significant in terms of its geographic size, population, and potential for growth, maintaining free trade treaties with nearly 50 countries, including the EU.
The British Chambers of Commerce, echoing Phil Couchman's sentiment, stressed the need to focus overseas, though observed that, with many of the UK's biggest trading partners suffering under their own cuts agendas, UK government must be more active in encouraging small firms to export.
“The growing problems facing the global economy, particularly the eurozone, presents UK exporters with major challenges," explained the Chambers' Chief Economist, David Kern. "With the austerity measures in full swing, it is clear that net exports will have to be the main engine of Britain’s economic recovery. With this in mind, it is time for the government to back a national export drive. Unless we accelerate the pace at which exports increase, it will be difficult to sustain UK growth.
“The government must focus on backing small- and medium-sized firms in key areas such as trade finance, insurance and promotion. While a competitive exchange rate and low interest rates will help UK exporters, additional efforts are needed to ensure that UK businesses can compete on equitable terms with overseas businesses.”
Couchman continued: "Australia is another important trade lane for UK exporters with its strong domestic economy. We have seen a surge in online sales from Australia's affluent and diverse population of more than 22 million; high end fashion goods and bicycles are just a few examples of what is being snapped up from UK businesses across the Pacific.
"With this in mind, now is the perfect time for UK businesses to begin trading with the ever expanding global marketplace, they should grab this golden opportunity with both hands."
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