By Maximilian Clarke
The UK’s trade deficit widened in November to reach £2.6bn, after an increase in the export of services was more than offset by a rise in the import of goods from outside of the EU.
“The trade figures for November show a widening in the trade deficit,” commented John Longworth, British Chambers of Commerce Chief Economist. “While the figures are largely as expected given the strong improvement seen in October, they are disappointing. Longer-term comparisons show that the rebalancing of the economy towards exports is going ahead, but the pace is inadequate and must be strengthened.
The wide goods deficit, which stands at £8.6bn a month, highlights the increasing importance to rebalance the economy towards exports. Currently a sizeable surplus of £6.1bn in the export of services is dwarfed by imports. Longworth expands:
“The difficult challenges facing the global economy, particularly in the eurozone, mean that exporters will have to work hard to maintain their position in world markets. While the government rightly continues to reduce the deficit, there will be a knock-on effect on domestic demand — making a strong export performance critical to Britain’s future.
“Over the next few years, net exports should be the main engine of the recovery. The government must support a national export drive, with more support for firms in key areas such as trade finance, insurance and promotion. Though a competitive pound and low interest rates can help our exporters, further efforts are needed to ensure that British businesses can compete equitably with foreign exporters. On their part, British exporters must reinforce their efforts to diversify sales to fast-growing economies, particularly in Asia.”
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