That’s right, pessimism fans: the pound has dropped to $1.557 after the gap between imports and exports rocketed from June’s trade gap of £1.256bn. It’s the biggest monthly trade deficit since October 2012.
Joking aside, it’s a blot on an otherwise flawless economic report: over the past month or so manufacturing has risen, the service sector has enjoyed its best growth since 2007 and retail sales have staged a miraculous recovery, while the UK’s growth prospects have improved dramatically.
The difference is that the trade deficit is about export, and export involves us depending on other economies – some of which aren’t doing particularly well at the moment. The ONS pointed out that exports to countries outside the EU had fallen by 18%. Considering the likes of India and China have both experienced lower-than-anticipated levels of growth over the past few months, that’s not hard to believe. But still, we could be making a better effort to secure our share of what exports there are to be had.
Although it’s worth pointing out that the US – one of our biggest customers – is recovering so well it’s actually causing some of its less economically developed rivals to falter (the rupee, for instance, dropped to a historic low against the dollar last month as investors took all their money out of India and put it back into the US). So we can’t blame all our troubles on that. So overall: could do better.