U.K. Trade Gap Widens

The U.K. trade deficit unexpectedly widened in June, a sign the weakness of the pound has yet to benefit exporters as the global recession persists.

The goods-trade gap was 6.5 billion pounds ($10.7 billion), compared with 6.2 billion pounds in May, the Office for National Statistics said today in London. Exports rose 1.4 percent, outpaced by a 2.2 percent increase in imports.

The Bank of England said last week that there is now evidence of stabilization in Britain's main export markets, while the world economy remains in recession. Policy makers have extended their program of bond-buying by 50 billion pounds to help the economy shake off the slump.

Exports to nations outside the European Union fell 2.6 percent, the statistics office said. Sales to EU countries, accounting for more than half of all exports, increased by 4.8 percent, the data showed.

Reports this month have added to evidence the economy is improving. U.K. service industries expanded the most since 2008 in July, Markit said last week. Consumer confidence rose to the highest level in more than a year, and manufacturing increased the most since January 2008 in June.

The trade gap in the second quarter narrowed to 19.6 billion pounds, the smallest in three years, the statistics office said.

The weakness of the pound may encourage export sales. The pound has dropped about 10 percent against a basket of currencies from Britain's biggest trading partners in the past year.

U.K. Trade Gap Widens

TradingEconomics.com, Bloomberg
8/11/2009 9:19:26 AM