Export figures raise economic hopes
Chancellor George Osborne has received some respite as strong export growth in August signalled a better-balanced economy than previously thought.
The UK’s trade in goods deficit fell to a four-month low of £7.8 billion in August as the value of exports rose 1.3% to £25.5 billion, the highest figure since comparable records began in 1998, the Office for National Statistics (ONS) said.
The strong growth in exports offset muted gains for imports, which rose 0.3% to £42.6 billion, the ONS added.
Economists said the figures offered hope of overall growth between July and September, but warned fears still persist over prospects for exports looking ahead, given the problems in the debt-laden eurozone.
The improved data comes after the Bank of England unveiled a £75 billion round of emergency support for the economy amid plummeting consumer confidence at home and the weakening global outlook.
Samuel Tombs, UK economist at Capital Economics, said: “August’s trade data suggest that the economy is considerably better balanced than previously thought and that demand for UK exports has grown despite the intensification of the eurozone debt crisis.”
A healthy export trade is key to the Chancellor’s hopes for the private sector to keep the economy afloat as he rolls out a package of tough spending cuts in the public sector.
The outlook for exports has been weak in recent months as the ongoing debt crisis in the eurozone – the UK’s biggest trade partner – raised fears over the health of several key European economies.
But the ONS figures showed the trade in goods deficit with eurozone members narrowed from £2.4 billion to £1.9 billion, driven by a 4% monthly increase in the value of goods exported to the region.
A spokesman for the Treasury said: “Today’s figures show a continued strengthening of the UK’s trading position. While the UK cannot isolate itself from the current global economic and financial uncertainty, the Government is creating a new model of economic growth that is driven by investment and exports.”
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