UK organic growth threatened by struggling exports
This morning’s ONS trade data reveals that the total goods and services trade deficit widened by £5.5 billion to a deficit of £14.6 billion in the three months to July 2024.
The trade in goods deficit widened by £5.9 billion to £53.5 billion in the three months to July 2024, while the trade in services surplus is estimated to have widened by £0.3 billion to £38.9 billion.
Monthly real gross domestic product (GDP) is estimated to have shown no growth in July 2024, after also showing no growth in June 2024.
The widening trade deficit that we have seen over the last few years amid struggling export levels could potentially pose a risk to the UK’s organic growth.”, said George Roberts, Senior Dealer at global financial services firm Ebury.
While inflated energy costs exacerbated the deficit in 2022, the domestic and international challenges faced by UK good exporters since Brexit has hurt profits and productivity.
Not only has the strong pound has made UK exports less attractive to the foreign market, but high interest rates have placed a chokehold on business development, while overseas conflicts threaten supply chains and market stability.
The UK’s economic performance so far this year points to a rebounding economy, a resilient labour market and cooling inflation. However, the government should look to kickstart growth in this hugely valuable sector if it wishes to sustain the UK’s economic achievements in the years to come.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
