London July 13 2022: Britain’s trade deficit widened for a fourth month in May as growth in exports of goods to the European Union slowed.
The overall deficit in goods and services reached £27.9 billion in the three months to May — up by £8.6 billion from the preceding three months, the Office for National Statistics said.
Growth in exports of goods to the EU proved a stumbling block, rising just 2.6% in the month of May compared with 12.7% growth in shipments to the rest of the world.
The figures suggest the UK’s trade performance continues to deteriorate, marked by the worst quarterly current account deficit since records began.
Sterling’s drop below $1.20 shows little sign of boosting the UK’s trade competitiveness. Exports are rising fast, but imports are increasing even more. That’s left the net position worse and kept the currency under pressure.
Trade with the EU has been a problem since the Britain’s exit from the EU common market in 2021. That brought new border checks and frustrated both importers and exporters with delays and paperwork. Economic studies have shown that the UK has lost relative export strength in the EU.
William Bain, head of trade at the British Chambers of Commerce, said the widening deficit was a concern and that “stronger performance on growth in services and goods exports is needed to counteract this and soon.”
Exports to the EU of machinery and transport equipment, as well fuel, were strong in May as the UK stepped up efforts to supply armaments and natural gas to continent. But that was more than offset by other factors, including the rising price of food imports.
In the three months to May, total imports increased by £20.2 billion to £205 billion while total exports increased by just £11.6 billion to £177 billion.
