UK exports slowly rebalancing the economy

UK trade deficit in goods and services was £2.7bn in May, compared with a deficit of £4.1bn in April. These figures were greeted with a positive response by British Chambers of Commerce’s (BCC) chief economist, David Kern.

“The trade deficit shrank in May, with underlying export volumes increasing by 6.6% on the month, and imports rising by only 1%,” said Kern.

“We shouldn’t place too much emphasis on one month’s figures, but the strong improvement in May comes after a disappointing figure in April. Unusually, UK exports to non-EU countries were higher than exports to the EU. This shows that exporters are adjusting to global reality, as growth in the eurozone continues to stagnate, and the main opportunities for our exporters will remain outside Europe.

The rebalancing of the UK economy towards exports has been too slow, he added. “But if this positive trend continues, the unjustified pessimism surrounding the economy will be dispelled. British exporters have huge untapped potential, but they need the government to do more to help them compete globally.”

Kern called for “bold action” in areas such as trade finance and insurance, the creation of a business bank and commitments to improve infrastructure.

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