GPD growth welcome but tougher times ahead

Reacting to the latest ONS figures on trade for May 2022, William Bain, Head of Trade at the BCC, said:

“Overall, on goods exports growth, the pace of recent progress is being maintained, although goods export trade with the EU was not as strong as in April 2022. Machinery, transport goods (ships and aircraft) and fuel exports to the EU performed well in May.

“Of concern is the widening trade deficit in the three months to May 2022 – which has risen on that measure on goods for four successive months. Overall, on goods and services, the trend has been upwards for the last five months, in addition to the rise in the current account deficit in Q1 2022.

“Stronger performance on growth in services and goods exports is needed to counteract this and soon.”

Goods exports grew by 7.4% in May 2022, driven by a 12.7% rise in exports to non-EU countries. This matched the 7.4% rise in goods exports in April 2022.

However, goods exports to the EU lost some momentum in May, rising only by 2.6%, only a fifth as fast as rest of world goods exports.

In the 3 months to May 2022 compared with the 3 months to February 2022, goods exports to the EU increased by 16.1% and to the rest of the world by 9.2%. Machinery, transport equipment and fuels were the key areas (ships and aircraft) where exports to the EU rose in May.

On goods imports these rose by 4.2% in May, largely down to a 5.2% rise in exports from the EU, again on a similar track from April’s data. Food import values are higher, in part down to rising import prices.

The overall trade deficit in goods and services is continuing to widen to £27.9bn (£23.2bn ex-inflation) in the 3 months to May 2022 – up by £8.6bn (£4.1bn ex-inflation) compared with the 3 months to February 2022.

This is mainly due to the relatively larger increase in goods imports (14.6%) over that period. This is the fourth successive month the trade deficit has widened.