May trade stats show UK must focus on boosting exports
The latest ONS trade statistics show that while the UK’s total levels of trade are maintaining a steady path of growth, the trade deficit, which measures the gap between imports and exports, widened further in the three months up to May 2022. In other words, the UK is increasingly importing more than it is exporting.
The main headlines are:
- Total trade in goods and services deficit widened by £8.6 billion in the three months to May 2022.
- When just looking at goods, the trade deficit widened by £9.5 billion in the three months to May.
- Imports of goods increased by £20 billion, while exports increased by £11 billion.
- Prices of imports have risen as a result of labour shortages, supply chain issues and increased input costs, exacerbated by the Russian invasion of Ukraine.
The widening deficit highlights the necessity to boost UK exports, which have lagged behind competitors in the global arena since we emerged from the pandemic according to data from the Netherlands Bureau for Economic Policy Analysis.
One of the main reasons for this is that businesses are continuing to feel the burden of the changed trading relationship with the EU, which has presented challenging barriers to trade. Whilst grappling with often complicated administration, businesses have found they are now not as competitive as European firms, which are pulling out of the UK as a market due to the complexities.
As the race for the new Prime Minister unfolds, policy is somewhat up in the air. But we urge the new leader, whomever they may be, to put export recovery as a top priority as the competitiveness of our economy depends on it.