Britain’s trade deficit narrowed sharply after a slump in natural gas prices reduced import costs and a flurry of exports of aircraft and cars.
(Bloomberg) — Britain’s trade deficit narrowed sharply after a slump in natural gas prices reduced import costs and a flurry of exports of aircraft and cars.
The deficit in goods and services trade fell by £6.5 billion ($7.9 billion) to £20.2 billion in the three months to November. Exports to the European Union were hit again in the wake of Britain’s exit from the bloc.
Business groups and economists warned that Brexit is having an impact on EU trade, with a fourth straight monthly decline. Goods exports to the EU fell 2.7% in November compared to the previous month, and exports to non-EU countries rose 4.2%, the Office for National Statistics said Friday.
The increase in non-EU exports was driven by a £700 million boost to shipments of machinery and transport equipment. Those included aircraft for Qatar and road vehicles sold to the US and China.
A drop in fuel shipments to the EU underpined the drop in exports to the bloc. That may reflect lower shipments of gas to the region, reflecting seasonal patterns.
The total value of goods imports increased by £1.8 billion in November compared to the previous month while goods exports edged up by £0.2 billion.
“Unprecedented energy costs, new trade barriers with the EU, and lasting damage caused by Covid lockdowns have created the hardest trading conditions for small businesses in recent history,” said David Bharier, head of research at the British Chambers of Commerce.
“To get back to growth in the long-term, firms will need to see the removal of trade barriers, particularly with the EU, investment in public infrastructure, and measures to improve their access to appropriately skilled staff.”
The UK statistics body said the narrowing in the overall trade deficit, excluding precious metals, was caused by the slump in gas prices slashing imports from non-EU countries. The value of fuel imports from countries outside the bloc decreased for a third consecutive month with a £1.1 billion decrease in November driven by lower gas imports from Norway and Qatar.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said that the UK’s trade deficit “returned to more normal levels, having ballooned in the first half of the year.”
“Brexit, meanwhile, is continuing to impede UK exporters,” she said. “In real terms, goods exports edged down to £31.5 billion, from £32.6 billion.”
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