Tuesday, 13 January 2009

UK external trade account worsens

The UK trade numbers illustrate the growing economic crisis. Both exports and imports are falling. However, exports are falling faster than imports.

The UK’s deficit on trade in goods and services was £4.5 billion in November, compared with the deficit of £3.9 billion in October. The trade account also deteriorated, rising to £8.3 billion, compared with of £7.6 billion in October

The lack of growth in exports is surprising, not least because sterling has fallen through the floor over the last 18 or so months. UK exports are now much cheaper, and in principle, we should have seen at least a limited pick up in export demand. For some reason, it simply hasn't happened.


Anonymous said...

We import food. Foreign countries don't import British food, or goods.
I am guessing this isn't good news.

roym said...

is it possible to separate out goods from services re exports?

worrying indeed, as we know services are buggered.

the fear is that re-aligning our economy is going to take a decade or more. what should we be doing that isnt made more cheaply or better elsewhere? biotech? renewables? how depressing

Anonymous said...

Alice, in order for the UK to export it's way out there needs to be a market into which to export. There might be such a market later this year, but right now nothing is moving. I work in UK manufacturing, ironically I am "forecasting demand". It's never been easier, as the demand is zero. You can barely give product away, as there is so much stock.

Once that stock is cleared exporters can benefit, but until people start to buy, and stocks therefore clear, there's no need to export.

mike said...

I guess there are many big trade ships around the world sitting idle. I expect a load of shipping companies to go bust.

JKA on Economics UK said...

There are six reasons why this is not to happening.

1 Demand for UK exports is falling, export markets are weak, world trade is slowing and most countries are entering recession.

2 Many exporters “price to market” in local currency, opting to hold prices and boost profit margins. There is no automatic pricing gain from a falling pound.

3 The value of exports is a function of volume x price. A Sterling fall of 25% would have to generate a 33% increase in volume to offset the average price fall and return the same value.

This and more.