Disappointing UK trade figures reveal sharp fall in exports to the Eurozone – ITEM Club
Disappointing net trade figures for Q1
The country breakdown suggests that overall exports are being supported by exports to the US
Short-term risks remain significant
Nida Ali, economic advisor to the Ernst & Young ITEM Club, comments on today’s trade balance figures:
“Today’s trade balance figures continue a trend we have seen in other ONS data releases in Q1, with an unexplained weakness in February followed by a bounceback in March. Most of the negative trends have reversed in March, and there has been a significant increase in exports to non-EU countries. However, looking at Q1 as a whole, net trade is disappointing and is likely to have exerted a small drag on GDP growth.”
Mark Gregory, Ernst & Young’s chief economist added:
“A closer look at the country breakdown reveals some worrying trends. Exports to nearly all Eurozone countries fell sharply in Q1 (compared to 2011Q4), but could have been much greater without the strong increase in exports to the US. This puts the state of UK exports in a delicate position, especially with the gains seen recently in the pound versus the US dollar.
“With the lion's share of the UK's total exports going to the Eurozone, exporters are highly vulnerable to developments in the Eurozone. The short-term risks remain significant.”
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