The UK’s trade deficit narrowed more than expected in February, helped by a fall in imports, mainly in aircraft and aircraft parts, which fell 46.3 per cent, contributing to three-quarters of the total fall in imports in the month.
According to figures from the Office for National Statistics (ONS), the trade deficit, which is the gap between the value of goods a country imports and what it exports, narrowed in February to £9.1bn, from £9.4bn in January, confounding expectations of a deficit of £9.2bn for the month.
Imports fell 2.2 per cent to £32.6bn, their lowest level since April 2011, and slightly offsetting a 1.6 per cent fall in exports to £23.5bn, the lowest level since November 2010. While including the UK’s surplus in trade in services, the overall trade deficit dropped marginally to £2.058bn.
Meanwhile, in the three months to the end of February, the goods trade deficit narrowed by £3bn to £26.2bn, representing a fall in exports of 0.1 per cent, while imports dropped by 3.5 per cent.
In addition, the goods trade deficit with non-EU countries narrowed sharply to £2.919bn in February from £3.910bn in January, against forecasts for a gap of £3.4bn.
Despite the trade deficit narrowing, it is likely that the figures will be a modest drag on first quarter economic growth, as imports are unlikely to drop much further, certainly in the short term, although it is hoped that exports will benefit from global growth gradually increasing as the year goes on.
However, given these figures, a spokesman for the British Chambers of Commerce (BCC) said, it is unlikely that the Prime Minister’s export target of £1trn by 2020 will be met, as more needs to be done to boost exports for that to happen.