The UK’s trade deficit reached a record £14.2bn in August, despite hopes that the devaluation in the value of the pound would grow exports.
As the pound has fallen to near parity with the Euro over the last 12 months, Brexiteers have continued to claim that the devalued pound would drive exports and re-align the economy. In reality, this summer has seen the UK’s trade deficit widen, with exports falling 2.7 percent and imports rising 3.9 percent in the three months to August.
The greatest fall in exports of goods were to non-EU countries, with an increase in sales to Europe slightly masking the decline.
According to the latest figures by the Office for National Statistics (ONS), during the month of August the UK exported £28.1bn of goods and imported £42.4bn, leaving a deficit of £14.2, the highest on record.
In response to the numbers, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“The widening of the UK’s trade deficit in August is disappointing, and signifies a much weaker trading position than the average for the year, with exports falling and imports rising sharply in the month. Taken together with the recent widening of the current account deficit, the figures paint a rather gloomy picture of the UK’s external position.
“The latest trade data is further evidence that the decline in sterling’s value over the past year is doing little to boost the UK’s overall trade position. Businesses continue to report that the post-EU referendum weakness in sterling is hurting as much as its helping, with firms continuing to face higher input costs due to the weakening currency, particularly those locked into global supply chains. For those companies that rely on overseas suppliers for their production equipment, a weak pound also makes investment in growth less viable.
“Businesses want to see comprehensive trade talks begin in the EU negotiations before the end of the year, and need answers to the practical questions about our trading relationship with Europe beyond March 2019. At the same time, it is vital that more is done help firms take advantage of new trading opportunities, including greater practical assistance for exporters and tackling some of the longstanding issues at home including the chronic skill shortages and the cost of doing business in the UK.”