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UK trade gap increases

The deficit on UK trade in goods and services seasonally adjusted increased from a deficit of £2.2bn in August, to a deficit of £3.5bn in September.

 

The deficit on trade in goods alone was £7.2bn compared with a deficit of £6.1bn in August, whereas the surplus on trade in services fell from £3.9bn in August to £3.7bn in September.

 

When oil and other erratic items are removed, the seasonally adjusted volume of exports was 0.2% lower whilst the volume of imports rose by 4.1% in September, compared with August.  

When considering the value of trade rather than the volume, total exports rose by £0.7bn to £19.4bn, which was a rise of 3.9%. However, total imports rose by £1.9bn or 7.5% to total £26.6bn.

A sharp rise in imports worsened the UK's trade gap in September.

A sharp rise in imports worsened the UK's trade gap in September.

 

Why did imports increase by such a large amount? Somewhat perversely our imports of cars rose by £432m in September compared with August. This was largely due to the car scrappage allowance whereby the government gives an allowance of £2000 against the purchase of a new car when an old car is scrapped. Unfortunately, the major impact of this last month was to draw in imported cars to meet the demand. Thus our imports of cars increased by 30% on the previous month, as a result of government incentives.

 

On top of this there were substantial increases in our imports of intermediate goods, chemicals and aircraft.

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Posted in Balance of Trade

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