Good news on trade

 

Britain's trade figures in July were much better than they were the month before. Thank goodness, because the June figures were truly horrible.

The turnaround in the monthly deficit number shows, yet again, just how volatile the trade figures can be.

In June, there was a record £4.3bn gap between the value of goods and services that Britain bought from the rest of the world and those that it sold - the highest monthly deficit since comparable records began. Now the July figures show that deficit falling right back to £1.5bn, the smallest in 17 months.

Goods exports rose by more than 9% - with exports to non-European nations reaching a record high.

If you look past the ups and downs - made even larger, no doubt, by the extra bank holidays in June - the picture for UK exporters is a bit brighter than it has been for anyone focused solely on the home market. But I'm afraid there's little in the trade numbers from the past few months to suggest we're about to export our way out of economic stagnation.

Taking the past three months together, total exports were 0.8% higher than in the previous three months. Within that, goods exports have risen by a less than amazing 0.3%.

Many City economists see more evidence in these figures that the British economy will get back to positive growth in the third quarter - with net trade finally making a positive contribution, albeit not a very exciting one.

The latest estimate from the National Institute for Economic and Social Research, released on 7 September, suggested that output grew by 0.2% in the three months ending in August. That's a little slower than their estimate for the three months ending in July, but at least it's positive.

As the Centre for Economics and Business Research has pointed out, July marks the third consecutive month in which the UK has exported more to markets outside Europe than to countries in the EU. Taking the three months together, exports to non-EU countries were nearly 4% or £1.4bn higher.

That is almost certainly where the big opportunities for UK exporters are going to lie in the future. Alas, it is not what is driving the rise in the non-EU share right now: that owes more to the enfeebled state of Europe than a boom in trade to the Brics (though exports to China did rise again in July).

Similarly, if trade with other countries does help pull the UK out of recession next month, that will speak to British exporters' determination to build sales, in a tough global economic environment. But it will also tell you quite a lot about the even weaker state of demand here at home.

 
Stephanie Flanders, Economics editor Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    +8

    Comment number 16.

    We ALL need to campaign against Gus O'Donnell being given the Bank of England job. (SF was on BBC News just now.)

    Here is why: He was Treasury Permanent Secretary when the Tripartite system was devised. He set it up.

    He is the author of the economic bubble and crash. He appointed Mervyn King.

    If we are to recover properly (see trade nos above) he is absolutely the last man for the job!

  • rate this
    +7

    Comment number 52.

    Sorry, but you really haven't got a grasp of reality when a 1.5 BILLION pound trade defecit can ever be described as "good news".

    Its like people thinking that house prices rising is "good news" when really it just means a bubble re-forming..

    Both are markers of an unsustainable economy.

  • rate this
    +6

    Comment number 49.

    If the financial sector is a 'wealth creator' then why does the taxpayer have to subsidise it to the tune of £90 billion every 3 months and, a running total of £930 billion?
    Can't we export these banks overseas and save ourselves all of this wasted money?
    We can always tax other criminal activities instead.

  • rate this
    +5

    Comment number 42.

    32.pim

    Don't accuse me of insulting you when you first belittled and insulted the vast majority of the UK's wage slaves by saying they all had 'good jobs'. The vast majority work to pay the bills and keep a roof over their head. And where does the most of their wages go - to banks to repay vastly over priced asset prices deliberately inflated to steal as much as possible.

    You didn't see this!

  • rate this
    +5

    Comment number 63.

    Price of Money is destroying the UK.

    Jon Moulton, did his party piece on R4 Today. Saving that there are too many zombie companies being kept afloat, when they should have gone bust as the price of money was so low it didn't matter if there was a business case or not.

    I seldom agree with Vulture Capitalists, but I do in this case. Money is so cheap it drives out good business and sustains bad!

 

Comments 5 of 89

 

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