British and US Trade Deficit’s Shrink
Britain was today staring down the barrel of its biggest trade deficit in 15 years. British export volume dropped drastically over the last 3 months (3.1%) as consumer spending dropped globally. The UK usually exports over a third of its goods to the EU, where consumers are facing austerity during the Eurozone debt crisis.
Until Friday the US had also shown very little in the way of growth. However the better-than-expected job report last week will do little to solve the problem across the atlantic in the long term, so growth is expected to slow again over the coming weeks. Today’s report has simply highlighted what many already knew; the UK is facing an uphill battle to get its economy back on track. One of the coalition’s primary objectives has been the realisation of a stable economy but without demand for our products and services that will be a near impossible challenge.
The damning report has come on the back of yesterday’s comments from Sir Mervyn King, Governor of the Bank of England, suggesting that Britain is in a double dip recession which won’t see increased interest rates until 2015. The fact you have to go back to 2010 for the last signs of any true economic growth only adds to the bleak picture of the current British financial situation.
US Trade Deficit also Hits 18 Month Low
The US trade deficit also hit an 18 month low when it was announced today that it shrunk to $42.9bn last month. Falling oil prices were blamed as the cost of importing dropped to $26.4bn. Preliminary estimates of total imports being $47.5bn, which would have resulted in a loss of just $500m, proved to be way off the mark as the US posted its worst performance since December 2010. The sharp fall of 10.7 percent will almost certainly have a negative effect on the markets over the coming days.