Turmoil in the eurozone continues to drag down the UK’s exporters, raising the probability that the economy contracted again in the final quarter of 2012.
Official statistics today show that export volumes to the European Union — which accounts for half of Britain’s trade — fell by 3.7% in the three months to November from a year earlier. Peter Dixon of Commerzbank said: “I suspect that what they confirm is that trade will act as a drag in Q4”.
There was a slightly brighter note on UK exports to the rest of the world, where volumes were up 6.8% between September and November.
Imports from the EU were up 1.8%, while imports from the rest of the world fell by 1.7%, which helped to narrow the UK’s overall trade deficit (including goods and services) in November to £3.5 billion, from £3.7 billion in October. However this was still higher than the £3 billion deficit recorded in November 2011.
Chancellor George Osborne has set a strategy of rebalancing the UK economy away from a reliance on consumer spending and imports towards manufacturing and exports. But analysts say there are scant indications of this occurring while our biggest trade partners in the eurozone remain in recession.
“Prospects for a turnaround are slim,” said Martin Beck of Capital Economics. “While recent surveys of export orders have picked up a touch, they remain low.”
The Office for National Statistics’ first estimate for the UK’s GDP performance in the final quarter of last year will be released on January 25.
