Weak sterling is doing little to help British exporters
The UK continued to import more from the rest of the EU over the summer months than it exported, new data shows, adding weight to the argument that the EU depends heavily on the British market to sell its goods.
But data from the Office for National Statistics (ONS) also suggests that British exporters haven't been able to capitalise on the weaker pound to sell more of their goods overseas, with exports falling overall and imports rising sharply. That widened the trade deficit to reach a record. On trade with the EU, the ONS data shows that in the three months to the end of August, the UK sold £42.8bn worth of goods to European countries, compared to the £66.6bn worth that it bought. That trend isn't new, although the value of exports are increasing. But so to are imports,
In the three months to the end of May, UK exports to European countries totalled £41.1bn, while imports was £64.6bn. In the three months to August of last year, EU exports reached £36.6bn, while imports were £60.4bn.
The latest round of Brexit talks are continuing in Brussels ahead of next week's EU summit of leaders, including British Prime Minister Theresa May, during which it will be announced whether or not sufficient progress has been made to allow negotiators move on to the next phase dealing with the future trading relationship.
It is widely speculated that enough progress will not have been made, and the decision will be deferred until December.
Exports of goods to the EU increased by £1.7bn or 4.1pc between the three months to May and the three months to August, due primarily to machinery and transport equipment exports increasing by around £800m. That helped to offset the fact that exports from Britain to the rest of the world fell again, despite the weaker pound.
The data showed Britain's goods trade deficit with the rest of the world hit an all-time high of £14.2bn in August, pushed up by increased imports of chemicals, machinery and textiles.
The UK exported £28.1bn of goods in the month and imported £42.4bn. "The latest trade data is further evidence that the decline in sterling's value over the past year is doing little to boost the UK's overall trade position," said Suren Thiru, head of economics at the British Chambers of Commerce.