UK Trade Deficit Widens Pre-Brexit

The UK trade deficit widened in May  before the referendum decision to leave the European Union (EU), according to the UK’s Office of National Statistics, this  is mainly due to the value of exports falling compared to imports, as the pound has depreciated.

Despite the increase in the trade gap, the shortfall recorded for May of £9.88 billion is still narrower than what was forecast from many economists, but expanded on the £9.4 billion that was found in April.

The rise in the trade deficit is thought to have weighed heavily on the UK economy, and was one of the reasons why the UK’s growth reduced to 0.4% in the first quarter this year, down from 0.6% in the final three months of last year.

Sterling has continued to stabilise against the US dollar, but failed to make any gains following the less than expected decline of 0.5% in industrial production announced yesterday, as many expected the fall to be in the region of 1%.

So far today GMT, the pound has made slender gains and the GBP/USD rate is just over $1.29, while against the euro the GBP/EUR 1.16 euros, a fall from leaping to over 1.175 euros yesterday afternoon.

The race to be the next prime minister is now down to the final two, where current home secretary and favourite Theresa May, will take on energy secretary Andrea Leadsome, who was a fierce campaigner to leave the EU, the contest will now be decided by the Conservative Party’s 150,000 members.

 German Exports Fall Month on Month

 Official data from the federal statistics office have revealed mixed news for German exports in May, as compared to April export trade fell by 1.8% while imports rose by 0.1%, but year on year exports increased by 1.6% from  May 2015.

Overall, Germany exported goods to the value of 97.2 billion euros and imported goods to the value of 76.2 billion euros in May, showing a foreign trade balance  of 21 billion surplus in euros, this was an improvement on the surplus for the corresponding month last year, which amounted to 19.4 billion euros.

According to provisional results from the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of 17.5 billion euros in May this year.

Export to EU countries increased by 2.1% to the value of 57.6 billion euros, while imports rose by 0.2%, 36 billion of goods were dispatched to other euro area countries, 1.5% higher than in May last year, imports from the euro area fell by 0.8% down to 34.8 billion euros.

Manufacturing turnover has also declined in May compared to the previous month, falling by 0.8%, this was a turnaround from April where the turnover increased by the same figure.

Domestic turnover for May decreased by 0.9% on April, while business with foreign customers fell by 0.8%, sales to euro area countries declined 0.5%, and sales to other countries dipped by 1.1% below the preceding month’s level.

The manufacturing of food products displayed the strongest increase in activity, with an increase by 5.9%, in contrast the steepest decline was found in the manufacture of motor vehicles.