LONDON (Financial Times) -The UK’s trade performance this year fell to its worst level since records began, heaping more pressure on sterling in international currency markets.
The country’s current account deficit was calculated at 8.3 per cent of gross domestic product in the first quarter of 2022, a deterioration from an average of 2.6 per cent across all of 2021. It was the worst figure on record since quarterly balance of payments data was first published in 1955.
The weak performance of UK exports and a surge in imports highlight the economic effects of Brexit. The figures tally with academic studies that show a decline in exports since 2021, when the UK left the EU single market and new border controls were introduced.
The Office for National Statistics warned that the figures for the first quarter of 2022 were “subject to higher levels of uncertainty than normal”. It added that it had developed a new system based on customs records to increase accuracy. Even when relatively volatile goods such as gold and other precious metals were excluded, the current account deficit still rose from an average of 2.4 per cent of GDP in 2021 to 7.1 per cent in the first quarter of this year.
The gaping current account deficit largely reflects a record imbalance of imports and exports. However, there were also deficits in investment income and transfers of money between countries. The ONS said it was investigating a big rise in imports that it had recorded along with foreign direct investment and advised caution on interpreting the quality of the data. Paul Dales, chief economist at Capital Economics, said the most noteworthy element in the figures was a 4.4 per cent fall in real exports and a 10.4 per cent leap in real imports.