Britain’s trade deficit in goods ballooned to a record high in August as official data again failed to signal any significant benefit to exporters from the Brexit-induced collapse in the pound.
Figures from the Office for National Statistics (ONS) showed that Britain’s trade deficit in goods rose by £1.4 billion to £14.2 billion as the country imported more chemicals, machinery and textiles.
In the three months to August, exports fell 2.7% while imports rose 3.9%.
It had been thought that British exporters would be able to benefit from the fall in the value of the pound, which makes UK goods cheaper for overseas buyers, but any real benefit has yet to materialise.
As Theresa May’s Brexit negotiations continue to falter, the ONS figures also show that Britain’s import of goods from the EU hit a record high in September.
The UK imported over £22 billion worth of goods from the EU in August, but only exported £14 billion, driving home the importance of a trade deal as the clock ticks towards Brexit in March 2019.
Oliver Kolodseike, senior economist at the Centre for Economics and Business Research, said: “The ONS figures highlight how dependent the UK is on trading with the EU.
“These figures indicate how important it is for the UK to make progress with Brexit negotiations as leaving the EU without a deal could have far-reaching negative consequences for exporters.”
Britain’s total goods and services trade deficit, the gap between exports and imports, widened by £2.9 billion to £10.8 billion in the three months to August.
In brighter news, output in Britain’s manufacturing sector came in ahead of expectations, climbing 0.4% month-on-month and 2.8% year-on-year.
Industrial production rose by 0.2% month-to-month in August, in line with forecasts and July’s 0.2% increase was revised up to 0.3%.
Construction output rose by 0.6% in August from July, however, on a three-month basis it fell 0.8%.
The data dump comes amid a worrying slowdown in Britain’s economic performance this year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the figures could mean the Bank of England, which had been expected to increase interest rates in November, may now think twice.
He said: “Industrial production is growing too modestly to offset the hit to GDP growth from the slowdowns in the construction and services sectors.
“Note that the MPC’s hawkish shift last month was driven by its judgment that there was upside risk to its GDP forecast, which no longer appears significant.
“As a result, we still think that investors are wrong to think that a November rate hike is a done deal; we continue to think that the MPC will wait until next year.”