Slowdown hits UK goods trade as impact of cost pressures grows

November 11, 2022

Reacting to the ONS Trade data for September 2022, William Bain, Head of Trade Policy at the BCC, said:

“The effects of higher inflation and reduced consumer spending globally on UK trade are growing clearer as both imports and exports of goods in September slowed.

“On the plus side, UK services trade in September held up, although areas such as hospitality are being hit at home, the demand for financial and business services products abroad remains stronger.

“To counter these strengthening headwinds for goods trade, we urge the UK Government to implement the recommendations of our Business Manifesto.

“To have any hope of expanding goods export opportunities for firms, the UK’s Export Strategy must be reinforced. This and other measures, such as negotiating reduced red tape in the EU trade agreement, will help mitigate the impacts of rising inflation on consumers and businesses at home.”

In Depth Analysis

Imports

In September, overall goods imports to the UK fell by 5% (£2.8bn) with EU imports down by 7.3% (£1.9bn) and non-EU imports down by 3% (£1bn), primarily down to lower gas imports from Norway and the fall in oil prices globally. Excluding inflation overall imports fell by 6.1% (£2.6bn) in September.

Among the largest falls in imports from the EU by sector was in chemicals (down by £0.7bn).

Fuel imports from outside the EU, principally Norway, fell the most in September – down by £1.3bn.

 

Exports

UK goods exports fell in September by 4.7% (£1.6bn). The drop in exports to the EU was higher than to the rest of the world – 5.1% (£0.9bn) compared with 4.2% (£0.7bn).

Excluding inflation, overall goods exports fell by 4.8% (£1.4bn) in September.

On exports to the EU the largest falls were in machinery and transport equipment (principally to Germany) and in fuel exports.

Falls in non-EU exports were led by drops in the same goods and commodities – mechanical and transport equipment, as well as oil exports.

Deficit

The overall trade deficit fell by £1.3bn to £23.7bn during September – fairly constant over the past 9 months.

In Q3, total UK goods imports rose by 2%, and UK goods exports rose by 3.2%. Imports of machinery and transport equipment from the EU fell by £1.7bn over the quarter and chemicals by £1.4bn over the same period.

Total services imports and exports both rose by 3.3% in the same period. Trade in pensions, travel, intellectual property and insurance services remained strong in Q3.

More detail on the ONS trade data can be found here.