Azernews.Az

By Bloomberg

Britain’s economy got a boost from trade in the three months through June as it posted the smallest quarterly deficit for four years.

The value of imported goods and services exceeded exports by 4.8 billion pounds ($7.5 billion) compared with 7.5 billion pounds in the first quarter, the Office for National Statistics said on Friday. It was the smallest shortfall for a calendar quarter since April to June 2011.

The improvement came on the back of a jump in exports, led by sales of chemicals to countries outside the European Union and shipments of oil worldwide. It represents a rare boost for exporters, which face the twin headwinds of a strong pound and anemic growth in the euro zone, the biggest market for British goods. Economists say the good news is unlikely to continue.

“Faced with disappointingly weak global economic growth and a rapid appreciation of its currency, the U.K. would expect to see exporters under pressure rather than enjoying surging growth,” said Chris Williamson at Markit in London. “It’s wise to take the official data with a pinch of salt.”

The pound was trading at $1.5512 as of 11:18 a.m. in London, unchanged on the day. The currency has risen 17 percent on a trade-weighted basis over the past two years and is up more than 10 percent versus the euro in 2015.

Exports Climb

Total exports rose 2.3 percent in the second quarter, with sales of goods jumping 4.3 percent. Shipments of goods to non-EU countries climbed 6.4 percent, while exports to the euro region rose just 1.9 percent. In volume terms, exports of goods jumped 6.6 percent, the most for almost a decade.

In June alone, the deficit was 1.6 billion pounds, as a 9.2 billion-pound shortfall in goods was partly offset by a 7.6 billion-pound surplus on services. Goods exports fell 1 percent and imports rose 1.5 percent.

Net trade acted as a drag on the economy in the first quarter, and is expected to continue to do so in the coming years. Surveys show export orders falling in recent months, and the Bank of England warned Thursday that the pound will hold back foreign demand and keep inflation subdued in the near term by depressing import prices.

Consumer spending remains the driving force behind the economy’s growth, which accelerated to 0.7 percent in the second quarter.