UK Trade deficit narrows but Travelex says picture is “concerning”

London - 9 November 2010

- Figures out today will dampen hopes that exports will offset impact of spending cuts
- Travelex says importers and exporters are adopting a “wait and see” approach until the cuts start

The UK’s trade deficit narrowed more than expected this morning, according to the latest report from the Office for National Statistics. The trade balance narrowed to £8.228bn from last month’s figure of £8.23 bn.

Industrial Output figures, also out today, came in as forecast at 0.4%, whilst Manufacturing Output hit 0.1% growth, just under the forecast of 0.2%.

Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments says, “Manufacturing and industrial output were pretty much in line with expectations - there seems to be positive momentum building in the industry. In general, manufacturers have benefitted from businesses building up stock levels, after slashing them during the recent financial crisis.”

Excluding oil and erratic items, the volume of exports fell by 1%. Bolsom comments, “The trade deficit figure is concerning. Export demand, particularly from Europe, is slowing. This will dampen hopes that a generally weaker pound will offset the economic impact of spending cuts and tax hikes.”

The latest Confidence Index report from Travelex, which measures trade confidence, showed importers and exporters adopting a “wait and see” approach in October, as they weighed up the potential impact of spending cuts and tax hikes on British Industry. Travelex said that most of their business customers accept the spending cuts are a “necessary evil.”

Travelex expect trade confidence to head higher over the near term, as the latest report showed that “importers and exporters seem to feel better about their longer term prospects than they do about their current situation.”

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development