UK trade deficit narrows more than estimated in March, ONS reveals
The UK trade deficit on goods and services narrowed more than expected in March as exports rose, official data showed on Tuesday.
The Office for National Statistics said the deficit came to £3.8bn in March, down from £4.3bn the previous month, beating analysts’ estimates of £4.2bn.
The narrowing of the deficit was supported by a £0.4bn increase in exports to £23.7bn, which mainly included unspecified goods, machinery and transport equipment.
However, in the first quarter the total trade deficit for goods and services widened by £1.1bn to £13.3bn compared to the fourth quarter.
The trade in goods deficit widened by £1.4bn to £34.7bn between the first and fourth quarters, reflecting a £1.9bn rise in imports of goods to £104.6bn.
The trade in goods deficit with the EU also expanded by £0.7bn to £23.9bn– the widest on record - as a 1.6% increase in exports was offset by a 2.3% jump in imports.
“The latest data help shed some more light on the weaker first quarter GDP as the contribution from net trade looks to have been negative once again as imports accelerated at a faster pace than exports," said Lee Hopley, chief economist at EEF.
"But, the export picture looks rather better than that seen through much of last year, with a pick-up in goods exports to the gradually-recovering eurozone. While the recent weakness of Sterling may be providing some support for exporters it’s a more robust recovery in global trade, particularly in non-EU countries, that will help deliver a positive contribution to growth from trade.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Looking ahead, the slowdown in domestic demand should bear down on imports, helping the trade deficit to narrow further.
"But the outlook for exports remains lacklustre; the real-effective exchange rate is about 5% above its 35-year average despite its recent depreciation, and sterling will rebound if the U.K. votes to remain in the EU, as we expect. "