UK Trade Deficit Narrows to 3-Month Low


British trade gap declined for the second straight month to GBP 3.83 billion in March of 2016 from a downwardly revised GDP 4.3 billion deficit in February as exports gained the most in six months. However, the gap for the first quarter was the highest in eight years as weak external demand weighed on exports.

The narrowing is attributed to both trade in goods and trade in services. The trade in goods deficit has narrowed by GBP 0.2 billion to GBP 11.2 billion and the trade in services surplus increased by GBP 0.3 billion to GBP 7.4 billion.

Total exports rose 1.2 percent to GBP 42.6 billion, following a 0.8 percent gain in February. The increase was mainly attributed to a GBP 0.6 billion rise in unspecified goods and a GBP 0.2 billion increase in sales of aircraft, offset by a GBP 0.5 billion fall in chemicals. 

Imports edged up 0.1 percent to GBP 46.4 billion, recovering from a 1.1 percent fall in February, mainly attributed to a GBP 0.4 billion increase in oil and a GBP 0.2 billion rise in aircraft purchases, offset by a GBP 0.3 billion fall in chemicals.

Exports of goods to EU countries was unchanged between February and March 2016 while imports went up by GBP 16.0 million, to a monthly record of GBP 19.4 billion.

Considering the first quarter of the year, exports grew 0.4 percent from the previous period and imports went up at a faster 1.1 percent. As a result, the total trade deficit for goods and services widened by GBP 1.1 billion to GBP 13.3 billion, the highest gap since the first quarter of 2008. The deficit on trade in goods widened by GBP 1.4 billion to a record quarterly deficit of GBP 34.7 billion.

Exports of goods to EU countries increased by GBP 0.5 billion due to exports of chemicals while sales of fuels other than oil fell GBP 0.4 billion. Imports from the EU increased by GBP 1.3 billion, with increases in imports of mechanical machinery and chemicals. This resulted in a widening of the trade in goods deficit with EU countries to a record quarterly and 3 monthly level of GBP 3.9 billion in the first quarter of 2016.

ONS | Joana Taborda | joana.taborda@tradingeconomics.com
5/10/2016 10:32:52 AM