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The UK trade deficit rose to £5.2 billion in September, according to the latest figures from the Office of National Statistics (ONS).
The data shows a significant deepening of the deficit since August, when it hit £3.8 billion. UK exports decreased by £0.2 billion, whilst imports increased by more than double that figure by £1.2 billion. The discrepancy between export and imports was attributed to the record £8.7 billion deficit with the EU.
Despite the evident weakening of the pound in the months following the June referendum, the ONS have found little conclusive evidence of the effect of currency movements on trade levels.
Following the UK’s vote to leave the European Union, the pound has seen a continual devaluation against both the dollar and the euro. In the immediate aftermath, the pound fell over 10 percent against the dollar and euro currencies in what marked a 31-year low for the British pound. In addition, the month of October saw the pound take further hits as Brexit uncertainty continued to encourage market volatility.
However, ONS statistician Hannah Finselbach noted:
“So far there is little evidence in the data of the lower pound feeding through into trade volume or prices.”
The data revealed that between the second and third quarters, the total trade deficit for both goods and services reduced by £1.6 billion to £11 billion.
In addition, the ONS found that there was an increase by £4.5 billion in goods exports, coupled with a £3.1 billion increase in goods imports between the June to August and the third quarter. However, this was deemed partially offset by the £0.1 billion decrease in services exports and a £0.3 billion fall in service imports.
Whilst the UK economy has shown a better-than-expected performance following the Brexit fallout, many economists anticipate any real damage to begin in the new year, after Theresa May formally initiates Article 50 and completes the Brexit process.