UK trade deficit more than doubles in August

The Office for National Statistics (ONS) reports that the UK’s trade deficit widened by £4.2 billion in August.

The difference between goods and services exported and imported to the UK more than doubled in August compared to a deficit of £1.7 billion in July.

The ONS said that the Olympics may have affected trade during August.

The ONS said: "There is some anecdotal evidence to suggest that some businesses had longer summer closures in August 2012, or that closures were held later than in previous years so that they affected August exclusively instead of being spread across July and August.

"In particular, this affected month-on-month movements in the manufacture of transport equipment industries."

Meanwhile, industrial production slipped in August, the 17th month in a row that this has happened. Industrial production fell by 1.2 per cent compared to the same month in 2011.

Howard Archer, Chief UK & European Economist at IHS Global Insight said: "The August industrial production and trade data are disappointing overall and reinforce suspicions that the UK economy still has its work cut out to achieve even modest sustained growth over the coming months following a likely appreciable GDP bounce back in the third quarter."

There was a trade deficit of £9.8 billion on goods which was partly offset by a surplus of £5.7 billion on services.

On a quarterly basis, in the three months to the end of August 2012, there was an overall deficit on goods and services of £9.8 billion, compared to a deficit of £9.2 billion in the preceding three months.

Exports of services were to £15.6 billion, whilst imports of services were £9.9 billion.

The deficit on traded goods rose to £9.8 billion in August, up from £7.3 billion in July. Exports of UK goods fell by four per cent from £25.7 billion to £24.6 billion in July.

Imports of goods rose by £1.5 billion or 4.5 per cent in August to £34.5 billion from £33 billion in July.

Overall, the figures show that an improvement to the UK economy from exports of goods and services is not happening and that an export-led recovery is looking less likely, heaping more pressure on the government.

The ONS reports that the decrease in total exports of goods stems from a fall in the export of semi-manufactured goods which fell by £0.5 billion between July and August.

In the three months ending August 2012, the deficit on trade in goods was £27.2 billion, compared with a deficit of £26.6 billion in the three months ending May 2012.

Total exports fell by £2.3 billion (3.1 per cent) to £73.9 billion and total imports fell by £1.7 billion (1.7 per cent) to £101.1 billion.