UK trade deficit larger than expected, EU balance hit low

The UK's deficit on trade in goods and services increased to £1.6bn in June compared to £0.9bn May, but with the second-quarter trade in goods deficit narrowing to £27.4bn, its smallest in two years.

A £9.2bn deficit in the balance of trade in goods for June was ahead of £9.1bn expectations and up from £8.4bn the month before, the Office for National Statistics said.

The EU trade balance deficit reached a record low of £7.56bn for June due to an increase in imports.

Non-European Union exports rose 14.4% in the quarter compared to the same period last year, with EU exports down 9.8%, which if the trend continued could see the UK begin posting monthly trade surpluses in 2016 with non EU countries.

Total exports in the three months to the end of June increased by £3.1bn to £74.5bn, attributed to an increase in chemical exports, exports of fuels and machinery and transport equipment, while imports increased by £0.1bn to £102.0bn over the same period.

Notable data on non-UK trading partners included a narrowing deficit with China in the quarter by £2.0bn to £4.8bn, while the surplus with the USA increased by £1.2bn to £4.7bn.

The UK trade figures show the extent of import and export activity and is a main contributor to the overall economic growth of the UK, the ONS said.

"This bulletin also reports on trade in services. However, the information on trade in services is mainly obtained from quarterly surveys, in some cases underpinned by larger annual surveys. That means that the data for the latest months are inevitably uncertain."

All data are shown on a seasonally adjusted, balance of payments basis, at current prices.