UK Trade Balance Widens As Global Economy Stalls

Figures released by National Statistics have shown the UK trade deficit on goods widened sharply over to £-11.49B in February, compared to £-5.76B in January and missing the market expectation of £-6B.

Exports tumbled 5.8% to a nine-month low, primarily due to a significant drop in goods shipments and a smaller decline in service exports. Conversely, imports rose 3% on the back of an increase in goods purchases and significant demand for medical supplies. The numbers were not entirely unexpected with many commercial flights still grounded, Europe and the US struggling to contain the outbreak of Covid-19, and China only a few weeks out of their own lock-down.

The pound initially fell on the back of the news but with reports of Boris Johnsons continuing recovery, combined with better than expected industrial and manufacturing production numbers, GBP continued to move away from its mid-week slump.