UK trade deficit unmoved as exports stay weak despite poor pound

The UK's trade deficit is slightly smaller than expected but there was not much encouragement on offer as exports remain weak but imports are still falling.

The balance of trade in goods and services stood at -£2.9bn in July, the same as the previous month's revised figure, though this was better than the consensus for a deficit of £3.2bn.

There was a shortfall of £11.6bn in traded goods as UK exports of goods and services edged down 0.2% month-on-month in July.

Exports were up just 0.6% for the three months to July compared to the three months to April, as exports to the EU dipped 0.3% in July while they fell 0.4% to non-EU countries.

In volume terms, UK exports of traded goods were up a weak 1.2% in the three months to July compared to the three months to April.

The three-month export volumes growth rate, excluding oil and erratics, fell further from 1.7% in June to just 0.5% in July, while imports volumes rose by 0.1%.

This was a fairly disappointing outcome, said Ruth Gregory at Capital Economics. "Looking ahead, though, given that the consumer slowdown should weigh on import volumes and the surveys are pointing to a further improvement in export growth, we still think that net trade should provide more support to GDP ahead.

"As a result, we remain optimistic that growth should hold up fairly well in the second half of the year, rather than slow."