Britain’s goods trade gap with the rest of the world widened slightly more than expected in June as the oil balance swung into deficit due to summer maintenance work in the North Sea, figures from National Statistics showed yesterday.
The headline deficit in goods and services widened out to £2.2 billion from £1.9 billion in May.
The trade gap for goods rose to £6.451 billion from £6.174 billion. Economists had forecast a deficit of £6.20 billion.
The ONS figures showed that, overall, imports rose by 2.2 per cent in June, the biggest increase since July 2008, while exports gained 1.4 per cent.
Markets showed little reaction to the data and economists noted the widening of the deficit followed a narrowing in May.
“It’s deteriorated a little bit and is a little bit wider than what it was in May, but it improved sharply that month,” said Alan Clarke, economist at BNP Paribas.
The oil balance recorded a deficit of £315 million after a surplus of £100 million in May. The ONS said this was probably due to increased refinery demand when UK production is lower because of summer maintenance on installations.
Most analysts still see the trade gap narrowing in the next few months as weaker sterling over the last year helps demand for British goods.
The goods trade gap with non-EU countries also widened slightly more than expected to £3.648 billion from £3.215 billion in May. Analysts had forecast a deficit of 3.5 billion.
Howard Archer, chief UK and European economist at analyst IHS Global Insight, said yesterday’s figures highlighted “several encouraging underlying features”.
“At £2.2 billion, the total trade deficit was still the second lowest this year and it was lifted by the oil balance swinging back into deficit after a now very rare surplus in May.
“Encouragingly, the trade deficit in traded goods excluding oil narrowed to £6.1 billion in June, which was well below the average shortfall of £6.6 billion in the first six months of 2009 and the average of £7.3 billion in 2008.”
Dr Archer added: “UK exporters will be fervently hoping that sterling does not go higher after rising appreciably from its lows seen around the turn of the year.
“Exporters will certainly be pleased to see that sterling has fallen back to US$1.65 after reaching $1.70 a week ago and also come off its recent highs against the euro.”
