By Marcus Leach
Figures from the Office for National Statistics released today (Thursday) show that the UK's trade deficit widened in February as exports of goods to non-EU countries dropped.
This news comes on the same day that the British Chambers of Commerce announced the results of a major survey that suggest export activity from the UK continued to grow, but an improvement in foreign language skills would further boost activity.
The ONS data revealed that the deficit on the trade in goods and services increased to £3.4 billion, from a revised £2.5 billion in January.
One of the main contributing factors to the decrease in exports was the decline in car sales to non-EU countries, such as Russia, China and the US.
“The trade deficit increase in February is disappointing, especially as the volume of exporting goods fell by more than five percent, while imports declined by less than one percent," David Kern, Chief Economist at the British Chambers of Commerce (BCC), said.
"Although the monthly trade figures can be volatile, and not too much weight should be given to one single figure, it is clear that the rebalancing of the economy towards exports is too slow.
“With the government’s deficit cutting measures squeezing domestic demand, a sustained UK recovery relies on exports, business investment, and replacing imports with domestically-produced goods. Given the renewed debt problems in the eurozone and difficulties in the global economy, British exporters will face challenges in maintaining their position in international markets.
“The government must act to address these issues by giving small- and medium-sized firms in particular extra support in key areas such as trade finance, insurance, promotion, market knowledge and skills. It is crucial to enable British firms to compete on equitable terms. While low interest rates and a competitive pound will help to reduce our deficit, British exporters must reinforce their efforts to break into faster growing markets such as China, India and Brazil.”
• The UK’s deficit on seasonally adjusted trade in goods and services was £3.4 billion in February, compared with the deficit of £2.5 billion in January.
• The deficit on seasonally adjusted trade in goods was £8.8 billion in February, compared with the deficit of £7.9 billion in January.
• The surplus on seasonally adjusted trade in services was estimated at £5.4 billion in February, unchanged compared with January.
• Excluding oil and erratic items, the seasonally adjusted volume of exports was 5.3 per cent lower, and the volume of imports was 0.9 per cent lower in February, compared with January.
• Export prices of goods rose by 1.5 per cent and import prices of goods rose by 0.7 per cent, compared with January.
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