The latest trade figures from the Office for National Statistics (ONS), published today (11 April), show that the UK’s trade deficit widened in the three months leading up to February 2022.
When excluding precious metals, the deficit between exports and imports of goods and services widened by £8.6bn to £21.2bn, reports the FT.
The trade in goods deficit, excluding precious metals, widened by £10.2bn to £54.4bn in the three months to February 2022, as imports of goods increased by £13.5bn (10.8%) and exports increased by only £3.3bn (4.1%).
The total value of goods exports rose to £28.6bn in February, from £26.5bn in January, but stayed below the £29.2bn average level of 2018.
The figures come with a health warning, however, due to a change in data collection methods in January 2022.
Exports to the EU decreased by 0.3% when comparing February 2022 with December 2021, the figures show.
Total imports of goods – excluding precious metals – decreased by £1bn (2.2%) in February 2022 because of a £0.7bn (3%) fall in imports from EU countries.
Imports from non-EU countries fell by £0.3bn (1.3%).
The figures complement findings from the IOE&IT’s Quarterly Exporter Monitor that showed a mild pick up in the UK’s month-on-month exporter counts and revenues in March 2022.
Exporter counts and revenues have gone up by 2.33% and 2.99% respectively across all UK regions in March 2022 compared to February 2022.
However, using a 12-month moving average, the numbers of exporters has dropped by 0.6%, their revenues by 0.7% and their employment by 1.3%. These trends come on the back of declines in February and projected declines in May and June after a small projected increase in April.
Red tape impact
Business Money reports that the number of UK businesses exporting goods to the EU fell 33% from 27,321 in 2020 to 18,357 in 2021, according to HMRC data.
Michelle Dale, senior manager at national accountancy group UHY Hacker Young, said the fall is due to the extra red tape UK businesses must now comply with when exporting to the EU.
“Businesses are not getting enough support from the government to navigate the post-Brexit trading minefield,” she said. “A lot of SMEs can’t afford professional advice to cope with Brexit-related red tape. Many are likely to have decided trading with the EU is not worth the cost.”
GDP almost flat
The trade figures were published alongside the latest GDP numbers, which showed that the economy expanded by only 0.1% in February compared with 0.8% rise in January.
Economists had been expecting gross domestic product (GDP) to grow by 0.3% in February, according to the BBC.
Car production hit
Growth slowed following a sharp fall in the production of cars and computer goods as supply chain problems disrupted production, according to Reuters.
British car production last month was 41% lower than a year earlier, reflecting ongoing disruption from chip shortages and Honda's closure of a car plant in July, the Society of Motor Manufacturers and Traders (SMMT) said on Friday.
The Guardian reports that experts are warning the economy is at risk of stalling or contracting after February’s slowdown.
ING’s James Smith forecast a small contraction of -0.2/-0.3% in the April-June quarter.
James Pugh, economist at RSM UK said: “While we aren’t currently forecasting a recession, it would not take much of a rise in oil prices or a disruption in supply chains to push the UK into one.”