A reduction in oil imports has caused the UK ‘s trade deficit to narrow, dropping from £3.5 billion to £3.2 billion, but the raw size of it is still being seen as cause for concern by some.
The Office for National Statistics issued the statistics, reporting a £0.5 billion drop in oil imports, which is down to a drop in prices per barrel rather than a reduction in the amount imported.
Economist Scott Bowman reminds that, while this reduction is, of course, a good thing, it is largely down to poor results in the month previously and that overall, for the quarter, figures aren ‘t great.
He said: “Overall, a shocking October result means that, despite the improvement I November, net trade will probably subtract from GDP growth in Q4 again, although by less than in Q3.”
There was also resistance to celebrate the news from UK manufacturers and producers, given the fact that the tightening of the deficit was driven primarily by low imports rather than high exports.
In fact, exports actually fell by £500 million in the month to November, dropping to £42.2 billion. Imports fell by a further £800 million, down to £45.4 billion.
Zach Witton at manufacturers ‘ organisation EEF said: “The UK ‘s export performance will be a key indicator to watch in 2016. Exports are set to remain under pressure from weak demand flowing from slower growth in emerging markets, particularly China.”
He added, however, that “stronger economic growth in the US and the Eurozone may provide some support.”
Dennis de Jong, from UFX.com offered summed up the bittersweet nature of the news, saying that “however downbeat the prospects for the British economy in the year ahead, Osborne and co will be thankful that there are many major economies in a worse state.
“All eyes will now turn to China in the short term to see how big an effect the slowdown and shares sell-off has on the UK” he said.
John McDonnell wrote an article in The Guardian criticising George Osborne after failing to make good on his claims that “2015 would be the year government borrowing would hit zero” warning that we are now “facing a noxious economic brew of his own making.”
He wrote that what the chancellor had described as a ” ‘long-term economic plan ‘” is really nothing more than “short-term politics of austerity”.
It was not just McDonnell criticising Osborne ‘s performance, as the UK ‘s manufacturing and export performance has been generally quite weak of late.
In 2014, the UK ‘s poor trade performance meant that it was the only G7 country to experience a fall in exports ñ they dropped by 1.4% over the year.
And while it may be quick to judge Osborne ‘s latest comments on, and policies regarding, the UK economy, David Kern, head of the British Chamber of Commerce, warned that: “the broader message is that unless radical measures are taken to strengthen our export performance, our trade deficit will continue to be a threat to the country ‘s long-term economic performance.”
This week also marked a drop in the sterling against the dollar to hat is now a five-year low.