Downbeat assessment on trade deficit

Date: 10th September 2009

New trade deficit figures highlight the importance for UK firms of expanding their export opportunities, according to a major commercial bank.

The government data revealed that, while surplus on trade in surpluses hit £4 billion for July, deficits for trade in goods were £6 billion.

This leads to an overall trade gap of £2.5 billion.

July's figures also show an overall rise of five per cent in exports and 2.5 per cent in imports.

This testifies to the generally improving conditions in economies around the world, as evidence grows that the effects of the financial crisis have lessened.

However, Iain MacDonald, head of trade product at financial services provider Barclays Commercial, said that many UK firms could do better over the months to come - especially due to the fact that the pound has weakened since 2008.

"Exporters are enjoying the competitive sterling rate, but from our experience are still not taking advantage of the robust GDP growth in many parts of the developing world," he said.

"There needs to be a greater drive from the UK trade community to grow the market for British products and services in the Far East in particular, and exporters need to look at investing in new markets to counter anaemic growth in traditional export markets."

Last summer, sterling was trading at over $2 against the dollar on the global currency markets.

It is now at around $1.65.