Britain’s trade deficit as a percentage of GDP hit a record high in the first half of the year, compared with no other six months since the mid-1950s, as oil and gas prices rose around the world. In the first two quarters of this year, the US is set to push the country into the red later this year.
The trade deficit, defined as the value of exports minus the value of imports, widened to 11.4 billion pounds ($13.8 billion) in June and 9.1 billion pounds ($11 billion) in May, the National Office said. Statistics.
A widening deficit
Economists polled by Reuters had expected the deficit to rise to 10.2 billion pounds ($13.8 billion).
The widening deficit in June was mainly due to the loss of two working days due to the extra Jubilee bank holiday and the postponement of the end of May bank holiday.
However, this month’s deficit reached historic levels as the energy crisis pushed up import prices.
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Britain’s oil trade deficit widened to 2.2 billion pounds ($2.6 billion) in June from 700 million pounds ($848 million) in May. That figure is 22 times higher than the 2021 average of 100 million pounds ($121.1 million).
The trade deficit for fuels widened to 5.1 billion pounds ($6.1 billion) from 3.7 billion pounds ($4.4 billion) in May and the 2021 average of 1.7 billion pounds ($2 billion).
The monthly trade deficit for gas is expected to rise fivefold to seven billion pounds ($8.4 billion) by the end of the year, compared with 1.3 billion pounds ($1.5 billion) in June, based on expectations in futures markets.
Dark business data
“The shortfall also reflects higher raw material costs for UK manufacturers and more Britons going on holiday abroad,” Samuel Tombs, chief economist at Pantheon Macroeconomics consultancy, told The Times.
“A rapid increase in global producer prices widened the gross output deficit, which rose to 13.2 billion pounds ($16 billion) in June, 12.3 billion pounds ($14.9 billion) in May and averaged 8.3 billion.” £10 billion by 2021.”
And Tombs, services imports rose 1.5 percent in value in June, while services exports rose 0.6 percent in value. “This may reflect the continued normalization of travel patterns. In general, the number of Britons leaving the UK over the summer is greater than the number of foreign nationals arriving in Britain.”
“The trade data is bleak and will only get worse in the coming months, as foreign investors look to provide the necessary funds to sustain this excess consumption, making the pound more vulnerable than usual to any decline,” he said.
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