British trade deficit increases in March

05-14-2010 08:47

The British trade deficit with the other countries in the world increased strongly in March, the Office for National Statistics (ONS) revealed.
The deficit widened to €4.02 billion in March in comparison to €2.39 billion in the previous month.

Imports – Exports

The strong increase is the result of the harsh weather in January, according to the ONS. The export of certain goods was delayed until February, subsequently boosting February’s numbers. However, the deficit was also inferior to the trade gap in March 2009. Exports climbed by only 1%, while imports edged up 5.2%.

Focus on exports

The trade figures demonstrate that Britain is having troubles with exporting goods. Even the weakness in the British currency doesn’t provide sufficient support. Mervyn King is Governor of the Bank of England, which is the central bank of the United Kingdom. He stated Wednesday that the British economy should focus on exports instead of on domestic consumption. The news has been received rather anxiously by economic experts.

British trade deficit

Ross Walker, economist at Royal Bank of Scotland, commented: “The figures are rather poor. I’m not very optimistic as net trade isn’t likely to provide any considerable support for growth.” Walker believes that especially the deteriorating situation is critical, considering the weaker Pound. “The crucial adjusting of the balance happens slowly, particularly with relation to the weaker Pound Sterling.”

British exports

Many components contributed to the increase in imports. A rise in imports of intermediate products boosted imports. Electrical and mechanical engineering elements, automobiles, oil and chemicals are some examples of intermediate products.
February’s deficit was diminished by exports of chemicals. In March, exports of chemicals dropped strongly.
Vicky Redwood, UK economist for Capital Economics, believes that the figures impact the outlook for the economy. “The eurozone is UK’s main trading partner. The longer-term outlook for British exporters have become less optimistic due to the recent problems in the eurozone.”