Export boom gives economy boost in wake of referendum

BRITAIN’S trade deficit with the rest of the world has fallen substantially, figures will show this week.

UK exports are likely to have grown on the back of the weakened pound and November’s trade deficit is expected to have been £3.5billion.

Although this is higher than the £2billion figure for October, economists say it represents a rosier overall picture of the economy’s performance towards the end of last year.

Howard Archer, chief UK economist at IHS Global Insight, said: ‘Some widening in the deficit seems likely to have occurred in November given the extent of the narrowing in October and the fact that it will take time for sterling’s weakness to feed through to markedly buoy exports.

‘UK domestic demand seems to have still been decent in the fourth quarter, suggesting that imports are likely to have rebounded from October’s marked drop.

‘However, if the total trade deficit did only widen to £3.5billion in November from £2billion in October, it would still indicate that the fourth quarter 2016 shortfall is likely to have come down substantially from a record £14.9billion in the third quarter.’

Sterling’s devaluation since the vote to leave the European Union has raised hopes that the UK could see an export boom that would reduce the current account deficit. Figures out last week showed that manufacturing export orders grew for a seventh month running in December.

But the weak pound also has a downside as foreign goods are becoming more expensive.

Other figures due this week will show that industrial and construction output grew further in November.