UK trade deficit widens to £7.3 billion in April

9 June 2010

- First fall in exports since January 2010 -

The UK’s goods trade deficit with the rest of the world widened in April to £7.3 billion from £7.2 billion in March. This is in line with importers and exporters expectations in the Travelex Confidence Index forecast, where 43% said they expected the deficit to widen in April.

Analysts had expected a narrowing to £7.0 billion pounds. Exports fell 0.6% and importers fell by 0.4% on the month, the first fall in exports since January’s weather related decline of 5.7%.

Mark Bolsom, Head of UK Trading Desk at Travelex Global Business Payments said, “The financial markets have barely reacted to the news, despite it being the first fall in exports since January. We know the volcanic ash prevented goods coming in and out of the country and that stands apart from genuine economic activity. This disruption will have skewed the figures.

“We can see from the Travelex Confidence Index however that after a slight dip in confidence in April, most probably due to the ash cloud, importers and exporters’ confidence in international trading conditions and expectations rebounded in May. Confidence may have been restored somewhat by a post-election honeymoon period for the new coalition government, as well as a weaker pound.

“Interestingly, the volcanic ash did not affect importers and exporters growing confidence in an export-led economic growth. From 42% in March, 51% of importers and exporters had confidence of this in May. This highlights the entrepreneurial spirit that UK importers and exporters have, despite ongoing economic turbulence.”

Sterling barely reacted to the news, gaining 0.13% against the euro to 1.2089 and 0.35% against the dollar, rising to $1.4451.

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