World Economy

UK Trade Deficit to Stay for Now

UK Trade Deficit to Stay for NowUK Trade Deficit to Stay for Now

Britain’s trade deficit narrowed by a miniscule amount in February 2016, nowhere near enough to allay concerns about a failure to rebalance the economy and increase sales of British products around the world.

The deficit—the difference between imports and exports—came in at £4.8 billion ($6.7 billion) in February, shrinking slightly from an eye-watering £5.2 billion in January, NewsNow reported.

Exports of both goods and services crept up over the month, with the total amount Britain sold overseas coming in at £42 billion in February. However, this was unchanged from the same month last year, bringing into question the success of the government’s exports drive.

The government wants to double the value of British exports to £1 trillion by the end of the decade. However, since 2011, exports have only increased by 2% and currently stand at £511 million.

“Trade figures suggest that the UK’s economic recovery remains extremely unbalanced,” said Samuel Tombs at chief UK economist at Pantheon Macroeconomics.

The UK’s “extraordinary thirst for imports”, Tombs said, had also held back a further shrinking of the deficit.

 “In spite of the small improvement in February, the latest figures are disappointing,” David Kern chief economist at the British Chambers of Commerce said.

  Search for New Markets

“These figures reinforce our view that much more is needed to boost our export performance. This must include a greater emphasis on helping firms to break into new markets.” The total amount of goods sold to countries outside the EU slipped by 3% over the year.

Meanwhile, the International Monetary Fund (IMF) chief Christine Lagarde said on Thursday that the possibility that Britain would vote to pull out from the European Union poses risks for the already weak world economy, AFP reported.

“The risk of Brexit is a worry because of its uncertainty,” Lagarde told a New York audience.

“The outcome of any new regime is totally unknown . . . It’s a worry,” she said. Britons will vote on June 23 in a referendum on support for splitting with the European Union, due to what many British believe are unfair burdens and limited benefits that come with membership.

But the vote has raised worries that it could create new barriers to economic growth at a time when the world economy shows more signs of weakening.

“It’s one of the risks that we have on the horizon,” said Lagarde, who earlier this week warned that global growth is “too fragile” and called on advanced economies to expand fiscal stimulus efforts. Lagarde added that she was “not encouraged” by a Dutch referendum Thursday in which voters opposed an EU pact with Ukraine, a result seen as favoring anti-EU forces.