UK posts largest trade deficit in 15 Months to December 2017

The UK’s deficit on trade in goods and services widened by £1.2 billion to £4.896 billion in December 2017 from an upwardly revised £3.652 billion in the previous month and way above market expectations of £2.4 billion.

It was the largest trade deficit since September 2016.

Imports of goods and services to the UK rose by three percent to an all-time high of £57.02 billion in December from £55.35 billion in the previous month, boosted by a 3.8 percent increase in purchases of goods, mainly fuels (6.6 percent), and a 0.7 percent gain in imports of services. Among trading partners, imports of goods from the EU jumped 6.5 percent, mainly from Germany (6.1 percent), the Netherlands (5 percent), Belgium & Luxembourg (16.9 percent) and France (0.9 percent).

In addition, purchases from non-EU countries advanced 0.8 percent, as imports increased the most from Norway (12.4 percent) and the US (7.9 percent).

Exports from the UK increased at a slower 0.8 percent to £52.12 billion in December from £51.70 billion in November, due to higher sales of goods (1.5 percent), mainly manufactured goods (2.8 percent), while exports of services fell slightly (-0.1 percent). Among major trading partners, exports of goods to the EU grew 6.9 percent, as sales increased mainly to Germany (16.8 percent), France (21.7 percent) and Ireland (2.3 percent). By contrast, exports of goods to non-EU countries declined 3.6 percent, namely to China (-27.4 percent), Hong Kong (-30.4 percent) and South Korea (-20.3 percent), while exports rose to the US (6.9 percent).

In the three months to December 2017, the trade deficit widened by £3.8 billion to £10.8 billion, due to a £3.3 billion widening of the trade in goods deficit and a £0.5 billion narrowing of the trade in services surplus. Large increases in fuels import prices along with decreases in fuels export volumes had the largest impact on the widening of the trade in goods deficit.

Considering 2017 as a whole, the trade deficit narrowed by £7.0 billion from the previous year to £33.7 billion, as exports rose 11.3 percent to £617.2 billion while imports increased at a softer 9.3 percent to £650.9 billion. Main exports were mechanical machinery, cars, electrical machinery and medicinal and pharmaceutical products, and the biggest export partners were the United States, Germany, France, the Netherlands, Ireland and China.

Meanwhile, main imports were electrical machinery, mechanical machinery, cars, other miscellaneous manufactures and medicinal and pharmaceutical products. The most important sources of imports were Germany, China, the Netherlands, the United States and France.