UK trade deficit narrows in August

| October 13, 2011
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The Office for National Statistics (ONS) has today revealed the UK trade deficit narrowed in August as export values hit an all-time high and imports fell.

The goods trade gap shrank to £7.77 billion in August from £8.15 billion the previous month, said the ONS.

Total exports of goods reached £25.5 billion, led by fuels intermediate goods such as mechanical engineering products and foreign sales of food and drink.

Meanwhile, imports fell 0.7% to £33.3 billion.

According to analysts, the strong export figures may boost the economic growth figures for the third quarter.

Howard Archer, chief UK economist at IHS Global Insight, described today’s figures as “appreciably better than expected”.

“However, severe concerns persist about the prospects for exports in the near term, at least given recent weakened global economic activity and the current worrying growth prospects,” he cautioned.

The figures come just a week after the Bank of England announced it will restart its quantitative easing (QE) scheme – a move which was widely expected after the Office for National Statistics (ONS) recently revealed the UK economy grew by 0.1% in the second quarter – slightly less than a previous estimate of 0.2%.

A recent slew of weak economic data had led to speculation that the central bank would embark on its “QE2” programme to boost the economy.

The Bank said it will pump a further £75 billion via its QE scheme after injecting £200 billion into the economy in November 2009.

QE, also known as printing money, is a process used for buying Government bonds or other financial assets.

Following the figures, sterling was relatively unchanged versus the dollar, trading at $1.5697 in early trading, up slightly from $1.5752 yesterday.

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