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Britain’s trade deficit in goods swelled to £12.5bn as the country went to the polls to vote on EU membership, its highest recorded level since March 2015 and the worst ever June figure.
Rising imports saw the trade gap rise from £0.9bn in May, when the balance hit £11.5bn – a revision from an initial estimate of £9.9bn according to figures from the Office for National Statistics. Analysts had expected the June figure to come in around £11.1bn.
Exports also grew, though by roughly half as much and to a smaller total of £24.6bn. Persistently strong imports underscore the drag inflicted on the UK by the post-referendum drop in sterling.
“The latest trade figures underline that it takes years, not months, for exchange rate depreciations to boost GDP growth”, said Samuel Tombs at Pantheon.
Ahead of the Brexit vote, Britain’s imports from Europe outstripped exports. The UK’s EU trade deficit in goods and services hit £8.3bn, up from the £8bn hit in May and higher than last June’s figure of £7.8bn. The non-EU deficit also grew to £4.2bn, a £0.6bn rise from May.
Sterling had been falling ahead of the release, which is coupled with industrial production data also out this morning. Although both numbers are for June, the Bank of England has said it stands ready to cut interest rates further should the post-referendum data begin to show deterioration in the UK economy.
June’s figures also suggest trade will not support UK economic growth in the second quarter, said Ruth Gregory at Capital Economics. She added: “Moreover, survey evidence points to very little annual export growth in the coming months”.
Britain’s trading relations with the EU are set to be the biggest battle ground in its upcoming exit talks with Brussels.
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