Trade winds blow against UK as shoppers drive the recovery

Shoppers and businesses drove the recovery between July and September as the economy faced a record trade headwind, official figures showed today.

The pace of overall growth was unchanged at 0.5% in the third quarter — down from 0.7% between April and June. But the detailed second estimate showed net trade — exports less imports — knocking 1.5 percentage points off growth, the biggest setback since the Office for National Statistics began collecting the figures in 1997.

Consumer spending rose 0.8% over the quarter as shoppers benefited from near-zero inflation, while companies also ratcheted up spending with business investment growing 2.2%.

But the trade figures were the biggest blow to hopes of a more-balanced recovery as “modest export growth [was] swamped by a massive bounce in imports”, according to Lee Hopley, chief economist at the EEF manufacturers’ association.

“This looks like the pattern of growth we can expect over the next few years, with spending by households and capital investment remaining the key economic players,” she added.

Exports rose 0.9%, but this was far outstripped by a 5.5% jump in exports — the biggest rise over a single quarter for nearly a decade.