UK exports disappoint as
economy limps to end of weak first half
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[August 10, 2017]
By David Milliken and Andy Bruce
LONDON (Reuters) - Britain's economy put in
a weak performance in June when declines in car manufacturing,
construction and exports gave an uninspiring end to the weakest first
half of any year since 2012.
A year after Britain voted for Brexit, there is still little sign that
exporters have gained much by way of competitiveness from the fall in
the value of the pound after referendum.
The Bank of England has said it is counting on a recovery in exports to
help lift growth in the economy.
"This is a disappointing set of data for a country that has recently
seen an 18 percent fall in the currency," said HSBC economist Elizabeth
Britain's goods trade deficit jumped to a nine-month high of 12.7
billion pounds ($16.5 billion) in June from 11.3 billion pounds in May,
exceeding all forecasts in a Reuters poll, and the figures also showed
the growing importance of exports to the European Union just as Britain
is preparing to leave the bloc.
The Office for National Statistics said nothing in Thursday's data
pointed to a material change in its earlier estimate that the economy
grew 0.3 percent in the three months to June after expanding just 0.2
percent in the first quarter.
Car production recorded its biggest quarterly fall since 2011 and
construction declined by the most since 2012.
Rising inflation has weighed on consumer demand since the start of the
year, and a separate survey on Thursday showed property valuers reported
the weakest growth in house prices in over four years.
A spike in oil production in June helped ensure the headline measure of
industrial output exceeded forecasts, growing by 0.5 percent after
flat-lining in May. But this reflected a lack of production
interruptions in North Sea oilfields from seasonal maintenance, which is
likely later in 2017 instead.
Industrial output contracted 0.4 percent on the quarter - in line with
previous estimates - while construction declined by more than previously
thought, driven 1.3 percent lower by less public sector, commercial and
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Workers clean windows
over looking Docklands Light Railway in Canary Wharf, London,
Britain July 5, 2017. REUTERS/Dylan Martinez/File Photo
Forecasters at Britain's National Institute of Economic and Social Research (NIESR)
estimated that the data showed GDP growth in the three months to July slowed to
Thursday's trade data continued the sharp divergence between private-sector
business surveys, where exporters have reported big increases in demand since
last year's Brexit vote, and official figures which show much less of a pick-up.
Goods export volumes dropped by 4.9 percent on the month in June, their biggest
fall in a year. Looking at the second quarter, exports were 5.0 percent higher
than last year, but this was almost matched by a 4.8 percent rise in imports.
The figures highlighted Britain's reliance on EU markets, at a time when Brexit
talks are bogged down on preliminary issues and have yet to discuss trade, less
than two years before existing arrangements are due to end.
The EU is the destination of more than half of Britain's goods exports, and over
the past year these exports to the EU have grown almost twice as fast as those
"Safeguarding the favorable terms of trade that UK firms currently enjoy with
partners and markets in Europe and beyond must be a key priority," the British
Chambers of Commerce's head of economics, Suren Thiru, said.
Much of the gain in exports reflected a stronger global economy, rather than a
weaker currency - which raised manufacturers' costs for imported raw materials -
and overall economic growth was likely to weaken, he added.
A Reuters poll on Thursday showed economists expected Britain to grow by 0.3
percent a quarter on average over the coming year, compared with 0.4 percent in
the EU countries that use the euro.
(Editing by Raissa Kasolowsky)
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