Trade Set to Boost U.K. Economic Growth in the Third QuarterLucy Meakin
Trade is on course to contribute to U.K. economic growth for the first time this year.
The deficit in goods and services narrowed to 11 billion pounds ($13.7 billion) in the third quarter from 12.7 billion pounds in the previous three months, the office for National Statistics said on Wednesday. Both exports and imports rose.
Trade, traditionally a weak spot, is forecast to help the economy through a Brexit-induced slowdown next year as the falling pound makes exports more competitive. Growth was a stronger-than-expected 0.5 percent in the third quarter, and net trade probably made “a small positive contribution,” the ONS said.
The improvement should also help contain the current-account deficit, which is running at almost 6 percent of GDP.
The trade figures for September alone were weaker than economists forecast as exports fell and imports increased.
The total deficit widened to 5.2 billion pounds, with the shortfall in goods alone climbing to 12.7 billion pounds. Excluding oil and erratic items, the goods-trade deficit hit
11.8 billion pounds, the highest since records began in 1998.
Exports of cars hit a record high but Britain also imported more ships, material manufactures, vehicles and oil, the ONS said.
“So far there is little evidence in the data of the lower pound feeding through into trade volume or prices,” ONS statistician Hannah Finselbach said in a statement.
Brexit supporters say the fact that the EU sells more to the U.K. than vice versa puts Britain in a strong position as it prepares to negotiate new trade terms with the 28-nation bloc. The gap with the EU climbed to a record 8.7 billion pounds in September.