UK trade deficit widens
By Abigail Townsend
Date: Friday 10 Feb 2023
(Sharecast News) - The UK trade deficit widened sharply in December, official data showed on Friday, following a spike in gas prices.
According to the Office for National Statistics, the value of goods imported grew by £1.6bn, or 2.9% month-on-month, in December. Goods imports from European Union states rose by £1bn or 3.8%, while those from non-EU countries increased £0.5bn or 1.9%.
The ONS said gas prices had increased "sharply" in December, contributing to a large increase in the value of gas imports from Norway.
In contrast, the value of goods exported decreased by £0.8bn or 2.3% month-on-month in December, primarily due to a 7.4% fall in exports to non-EU countries. Exports to the EU rose 3.1%.
As a result, the total trade in goods balance was £23.6bn in December. In the fourth quarter, excluding precious metals the deficit widened to a record £64.0bn.
Gabrielle Dickens, senior UK economist at Pantheon Macroeconomics, said: The trade deficit widened sharply in December on the back of higher gas prices. The headline deficit was the largest for six months, and continued to be flattered by a surplus in erratics. The underlying deficit was the widest for 10 months.
"Brexit also still is an important part of the picture, as it is continuing to hold exports back.
"The underlying trade deficit likely will remain wide by historical standards over the coming months, but it should start to narrow. Future prices suggest the monthly trade in fuels deficit will be only around £1bn higher than normal in the second half. The impact of Brexit, however, likely will linger for longer as UK exporters continue to be cut out of global supply chains."
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