UK trade gap narrows to £3.3bn

The UK economy has received a fillip today with the latest figures on global trade revealing that the trade deficit narrowed significantly in July.

Economists forecast growth in the economy as a much hoped for rebound in the US economy and a recovery in the Eurozone countries is likely to fuel demand for UK goods and services.

The figures from the Office of National Statistics revealed that the UK trade deficit had dropped from £4.5 million in June to £3.3 billion in July. The July figure was a significant improvement on some analysts' forecasts that had predicted a deficit of around £4 billion.

Earlier this week the ONS published figures indicating that the manufacturing sector performance had been better than expected and the National Institute of Economic and Social Research indicated that domestic industrial growth stood at around 0.8% - at its strongest in almost a year.

However, world exports remain 6% lower in the quarter and the ONS report indicated that the overall trend in exports is static.

The trade deficit with the European Union, which amounts to over half the UK produced goods, decreased to £1.5 billion, down from £1.8 billion.

Cautioning that it was too early to predict that the worst was over, many economists believe that the signs are nonetheless beginning to look more encouraging for the UK economy.


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