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UK trade deficit widens in October as firms stockpile goods

By Alexander Bueso

Date: Tuesday 10 Dec 2019

UK trade deficit widens in October as firms stockpile goods

(Sharecast News) - Britain's deficit in trade with the rest of the world widened in October, as UK companies stockpiled goods ahead of the missed Brexit deadline, while overseas firms showed continued wariness towards the country's exports.
According to the Office for National Statistics, in volume terms and over the three months ending in October, the UK's trade deficit just in goods increased by £5.2bn to reach £31.8bn.

The pace of purchases of goods from overseas returned to the level seen during the first quarter of 2019, climbing at a month-on-month clip of 9.8%.

The total trade deficit, which also includes services, meanwhile increased by £1.1bn to £4.4bn (consensus: -£2.8bn).

Commenting on Tuesday's trade data, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "underlying demand for U.K. exports remains depressed by Brexit uncertainty; few overseas companies want to re-jig their supply chains to include U.K. suppliers, only then to find that Brexit disruptions knock everything out of kilter.

"This uncertainty will linger next year, when negotiations over the trade deal will be ongoing, if the Conservatives win a majority on Thursday. Renewed sterling weakness next year, if trade talks become fractious, won't help to soften the blow materially, given that a lower pound would raise producers' costs."

In value terms, the total UK trade deficit grew by £2.3bn to £7.2bn over the three months to the end of October, as import growth outpaced exports.

During the same period, excluding unspecified goods - amongst which non-monetary gold is included - then the total trade deficit narrowed by £4.3bn to £2.9bn, ONS said.

Removing the effect of inflation, the total trade deficit in volume terms widened £1.1 billion to £4.4 billion in the three months to October 2019.

Britain's shortfall in its trade in goods with countries from the European Union increased by £3.5bn to reach £25.0bn, while with non-EU countries it rose by £3.3bn to £10.6bn.

Over the preceding 12 months, the total trade deficit widened by £23.2bn to £48.7bn, mainly as a result of the trade in goods deficit, which widened £19.3bn to £154.9bn.

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