UK Trade Deficit Narrows
The UK trade deficit has narrowed to a seven month low as the drop in imports hits home according to the Office of National Statistics (ONS).
The difference between imports and exports narrowed to a seven month low in October to £2 billion from £2.8 billion the month before.
Partially spurred by a drop in imports as oil prices fall ever lower, a rise in silver sales to India also made a considerable impact. The goods trade deficit for October also fell from £10.5 billion to £9.6 billion as that also fell to a seven month low but it was marginally higher than the £9.5 billion that had been predicted by economists.
The trade deficit between the United Kingdom and the European Union also narrowed as the country managed to buck fears that the slowing Eurozone might temper demand as exports actually saw a minor rise.
It’s perhaps also part of the reason that the British economy grew 0.7% in the third quarter of this year although trade performance did weigh on activity as exports are not as high as hoped for. The ONS said trade would represent less of a drag in the final reading of economic growth because of revisions to data from previous months, but said it had not yet calculated what the difference would be.
Talking of this improvement IHS Global Insight chief UK economist Howard Archer said it could make a “rare positive contribution to UK GDP growth in the fourth quarter”. Going on to say:
“This would be a significant boost to the chances that growth will hold up well in the fourth quarter and come in close to the third quarter outturn of 0.7% quarter-on-quarter.”
As Britain starts to move towards serious economic recovery, this narrowing in the deficit shows up as a seriously good signal on the country’s road to reaffirming itself as an economic powerhouse. The country remains the most popular destination for investors wanting to get into the European market.
There have been fears that Britain may suffer from the slowdown that major trading partners have seen, such as China and the European Union, but so far the UK has managed to insulate itself from these troubles with increased domestic spending and growth.