Overseas trade sinks as economic headwinds gain strength

Responding to the latest ONS data on the UK’s trade figures, William Bain, Head of Trade Policy at the BCC, said:

“June’s trade data ended what was a strong second quarter of the year overall with a damp squib.

“The 8% fall in goods exports values in June was driven by a range of factors across fuel, chemicals, transport equipment and other manufactured goods, but there are gathering economic headwinds which all UK goods exporters now face.

“As well as general economic measures to support growth in the months ahead, this data shows the risks of weakening, instead of stabilising, our trade relations with the EU.

“There is now an urgent need for real delivery by the UK Government’s Export Strategy to support the growth ambitions of UK exporting businesses.”

In Depth Analysis:

Two months of stronger growth in goods exports came to a halt in June as overseas sales fell and the trade deficit widened.

April and May had both produced 7.4% month on month rises in UK goods exports but in June there was a fall of 8%.

EU goods exports were down by 3.9% (a rise in chemicals exports offset by lower machinery, transport equipment and fuels exports) and non-EU goods exports slumped by 11.9% (across many product categories including miscellaneous manufactured products).

The overall trade deficit in goods and services widened by £2bn in Q2 2022 to a record £27.9bn (£22.6bn excluding inflation).

Overall, in Q2 goods imports to the UK increased by 8.3% compared with Q1, and goods exports by 12.4%. UK goods export values to the EU rose across the quarter by 16.3% (strengths in fuel re-exports and ships, aircraft and mechanical machinery) and to the rest of the world by 8.6% even taking into account June’s disappointing data.

UK goods imports declined by 1.1% in June, driven largely by a 4.1% fall in goods imported from the EU (mainly in chemicals from the pharmaceutical sector) offset by a 2.1% rise in imports from the rest of the world (largely fuel import rises from the US and Norway).

Comparing trade performance in Q2 2022 with the same quarter 4 years previously, overall goods exports were 11% higher in Q2 2022, and imports 31% higher.