Trade Deficit narrows in UK despite the Brexit slowdown

Economy - Himanshu Gill - Dec 10,2016

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trade deficit narrows in uk despite the brexit slowdown

The UK trade deficit in goods and services went down by 2 billion pounds ($2.51 billion) in the month of October, much more than expected.

This news fueled hopes in the UK economy of finishing the year on a strong note, confounding speculations that the Brexit vote would spark a slowdown in the country’s economy. A marginal rise in exports and fall in imports showed UK’s trade balance on the positive side.

According to the Office for National Statistics (ONS), exports in the country increased by 2 billion pounds, riding on machinery and transport orders, while imports fell by 1.8 billion pounds. The ONS also admitted on making large revisions in the trade figures dated between January 2015 and September 2016, as it had made an error in the methods of recording gold trade.

The ONS revised September's deficit to 5.8 billion pounds from 5.2 billion pounds previously, while the deficit for the third quarter of the year widened to 14.9bn pounds from the previous estimate of 11bn pounds.

Exports to the EU from Britain rose by 0.2 billion pounds in October, led by increased sales in the Republic of Ireland and the Netherlands.

However, economists still wary of the falling rates of pounds against the US dollar, saying that there was no evidence that the weak pound which makes UK goods cheaper overseas was boosting exports. In the three months to October, import volumes of goods were up by 4.4 percent - the biggest rise since April - while goods exports were down by 2.1 percent after a 5.1 percent drop in the third quarter this year.

Also, October was slow for construction, with output going down by 0.6 percent, signaling a lower spending on infrastructure. Construction orders were weaker than before after the Europe referendum.