–Jul global goods deficit Stg8.667bn vs Stg7.532bn in Jun
–Jul global goods/services deficit Stg4.916bn vs Stg3.932bn in Jun
–Jul global goods deficit ex oil/erratics Stg7.699bn vs Stg6.885bn Jun
–Jul global goods deficit median forecast Stg7.6bn; total Stg3.3bn

LONDON (MNI) — The UK’s good trade deficit widened to its highest
level on record in July as imports rose sharply, according to figures
released by National Statistics Thursday.

The goods trade deficit widened to Stg8.667 billion in July from
Stg7.532 billion in June, the highest since records began in 1697. The
widening was also above the median forecast for a shortfall of Stg7.6
billion.

The value of imports rose 3.1% on the month, led by higher imports
of chemicals and oil.

A fall in exports of 0.9% between June and July is likely to
increase fears that the export sector is unlikely to prove to be the
engine of growth over the coming years as public sector cuts hit
domestic demand.

The data, however, are erratic month to month and exports rose 4.2%
on the month in June and remain at around their highest level for two
years.

Moreover, some of the increase in imports this month, the main
cause of the deterioration in the trade position, was due to maintenance
at oil fields in July which boosted oil imports.

Including services, the total trade deficit widened to Stg4.916
billion in July from Stg3.932 billion in June, the highest since August
2005 when the figures were distorted by the effects of Hurricane
Katrina.

The trade deficit with EU countries widened to Stg3.867 billion in
July as exports fell 1.5% on the month and imports increased 3.2%.

The shortfall with non-EU countries widened to Stg4.8 billion from
Stg4.313 billion. Exports to non-EU countries fell 0.4% while imports
rose 3%.

The Bank of England has long said that it expects to see the UK’s
share of exports in world trade to get a significant boost from the
depreciation in the currency from pre credit crunch levels.

Bank of England Governor Mervyn King said last month that countries
like China, Germany and Japan would not be able to continue to run large
trade surpluses, warning that this meant others had to run deficits.

“That has fallen largely on the US and UK and countries like Spain.
That cannot go on. We cannot borrow from the rest of the world in the
way that we have been doing. We are adjusting. If they try to continue
growth based on the export model there is an inconsistency there and one
way to reconcile it is to have a weak level of world demand overall or
there will be conflict again,” King said in evidence to the Treasure
Select Committee in July.

–London newsroom: 020 7862 7492; email: drobinson@marketnews.com

[TOPICS: M$BDS$,M$B$$$,MT$$$$,MABDS$]