UK trade with EU falls while exports rise to rest of the world

At £28bn, it’s the UK’s biggest trade deficit since records began. But there are reasons to be cheerful for UK exporters, as the economy heads towards a triple-dip recession. One just has to look beyond the Eurozone.

First, the bad news

Exports to Europe fell 5.2 per cent in the quarter ending in October. This includes more than a 10 per cent reduction in exports to Spain, Sweden, Italy, Germany and others.

The Euro area accounts for nearly half of UK exports, and it won’t be returning to its pomp any time soon. The economy of the combined Eurozone shrunk 0.1 per cent in the third quarter, which continues to hold down net trade.

“We continue to expect industrial production to fall further in 2013 as the Eurozone’s recession deepens and high inflation holds back domestic consumer demand for manufactured goods,” Samuel Tombs of Capital Economics told Bloomberg.

Beyond the Eurozone

Sales to the rest of the world continue to rise. In the last year, exports to the USA and China were up more than 5 per cent, while sales to South Korea are up a staggering 65 per cent.

A free trade agreement was forged between the EU and South Korea in 2011, which could explain some of the rises in trade.