Sharp drop in consumer demand narrows UK trade deficit

Britain's goods trade deficit with the rest of the world narrowed more than expected in April, although the improvement was driven by a sharp fall in demand for consumer goods, rather than any big improvement in exports. The Office for National Statistics said that Britain's goods trade gap narrowed to 7.389 billion pounds in April from 7.708 billion in March, lower than analysts' forecasts for a deficit of 7.55 billion pounds.
Economists said that while the figures suggest net trade would make a positive contribution to overall economic growth in the second quarter, the broadly steady level of exports was slightly disappointing. The ONS said exports rose by 0.1 percent on the month, while imports fell 0.9 percent.
The decline was driven by sharp falls of imports of cars and consumer goods - in particular clothing, footwear, jewellery and artwork - which were 319 million pounds lower on the month. Imports of intermediate and semi-manufactured goods also fell sharply.
Net trade was a driving force of economic growth in the first three months of this year, contributing 1.7 percentage points to overall economic output, which grew by just 0.5 percent. Britain's trade deficit with the European Union - its biggest trading partner - narrowed to its smallest since last June, with imports down 2.2 percent while exports fell 1.5 percent on the month. The goods trade gap with non-EU countries was slightly wider than expected at 4.339 billion pounds, down from 4.495 billion in March, as oil imports rose.