Silver lining for trade deficit high?

Source: Supply Chain Digital

Date :09/11/2007 12:18:30

Official figures released today show Britain had its worst trade performance in goods in September since records were first collected.

Record low

The monthly shortfall of £7.8 billion was almost £1 billion higher than the August report, but the three-month figures, widely believed to a more accurate representation, show that the gap has widened to a shocking £14 billion, the worst since records began in the seventeenth century.

With the continued strong performance of the pound, which shot to a 26-year peak before the data was released today by the Office of National Statistics, there seems to be no let-up for the struggling UK export sector.

But analysts say the root of the problem doesn’t lie at home.

``It's a dollar weakness story rather than a pound strength story,'' said Peter Dixon, an economist at Commerzbank AG in London. ``It's clearly going to have an impact on European manufacturing profitability.''

Premium goods

But it seems that we are making the most of the situation. UK exports to the US fell by almost £250 million in September, while imports rose by almost £125 million, largely in the luxury goods markets.

With the dollar trading at $2.11 earlier today, this seems to be the one bit of good news for UK consumers. The manufacturing and export industries however, will continue to feel the pinch.

November 9, 2007