In recent years, the UK has run the largest trade deficits with Norway, Germany, China, Hong Kong and Netherlands. This is mainly due to increase in demand of consumer goods, a drop in UK manufacturing and a decline in local oil and gas production. Over the past 12 months, the deficit has been flat, damping hopes that rising demand for UK goods and services will spur an economic recovery.
Since 2010, Britain began trying to rebalance its economy more towards exports and away from a reliance on domestic consumption after the financial crisis. But progress has been slow, despite a roughly 20 percent fall in the value of sterling since 2008.
Economists have warned of a possible balance of payments crisis unless the UK can reduce its persistent over-spending. Without an adjustment that either reduces imports or pushes up exports, investors may become wary of putting their funds in the UK.
The latest trade figures from April 2013 however show that the trade deficit is narrowing on a month-on-month basis. The better data on trade were mainly due to a fall in imports from countries in the rest of the EU, Britain’s main trading partner.
Still, British exporters must continue their efforts to diversify trade towards new markets, especially as the EU continues to struggle. The latest figures suggest that much of the improvement has been down mostly to the fact that imports are falling, not that exports are rising.
Total value of exports: $481 billion
Primary exports - commodities: manufactured goods, fuels, chemicals; food, beverages, tobacco