U.K. Trade Deficit Remains Unchanged In April

The U.K. trade deficit was broadly unchanged in April, defying expectations for a decline, as the value of exports and imports hurt by the volcanic eruption in Iceland.

The goods-trade gap was 7.3 billion pounds ($10.6 billion), the same as in March, the Office for National Statistics said. Imports fell 0.4 percent, while exports dropped 0.6 percent.

With Britain facing emergency budget measures to tackle the nation’s record budget deficit, the Bank of England is counting on net trade to aid economic growth this year. Exporters may still struggle to increase sales in their biggest market, the euro region, as economies there endure austerity measures invoked to quell the sovereign debt crisis.

The U.K.’s trade deficit with the European Union widened to 3.3 billion pounds in April, from 3.2 billion pounds in March, as imports rose faster than exports, the statistics office said.

The trade gap with non-European Union nations stayed at 4 billion pounds as exports fell faster than imports, the statistics office said.

The data is the first to show the impact on U.K. trade of the ash cloud that shuttered European airspace in April after a volcanic eruption in Iceland. Non-EU trade is likely to have been affected more than that with the EU since almost half of Britain’s exports outside the region are transported by air, officials said.

Today’s data suggest that the weakness of the pound has yet to produce sustained benefit for U.K. exporters. The currency has fallen about a quarter on a trade-weighted basis since the start of 2007, making overseas sales more competitive.

A U.K. index of export orders rose to the highest in at least 15 years in the second quarter, the Engineering Employers Federation said on June 7. The economy grew 0.3 percent in the first quarter, aided by biggest jump in manufacturing for four years.

U.K. Trade Deficit Remains Unchanged In April

TradingEconomics.com, Bloomberg
6/9/2010 9:26:57 AM