A total UK trade deficit of £2.4 billion is no cause for concern, according to the Institute of Directors, following the publication of figures by the ONS that may appear worrying at first glance.
The ONS reported a £9.2 billion deficit on goods trade within the UK; but this was offset by £6.8 billion of exports, creating a net deficit of £2.4 billion.
Export performance is particularly strong in long-haul destinations, the figures show, with a 1.5% increase in exports outside of the EU.
Closer to home, exports within the EU fell by 0.2% in May, and domestic demand is increasing imports – the reason why the IoD say there is no need to panic.
IoD head of Europe and trade policy Allie Renison said: “While first impressions are indeed worrying, it should be pointed out that that the widening gap is down to a rise in imports, which grew by 1.7% and are a sign of robust domestic demand.
“Perhaps more alarming is the drop in the UK’s trade surplus in services, which fell from £7.1 billion in March to £6.8 billion in May, although this is likely down to imports returning to higher levels.”
With no room for complacency in the current economic environment though, the IoD add that a continued focus on export growth is a sensible priority, stating that the government are right to keep this high on the agenda for UK businesses in the present climate.