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Economy in Brief

Demand Conditions in the Importing Countries More Important than Exchange Rates in British Exports
by Louise Curley February 10, 2004

Britain's merchandise trade deficit improved by 197 million pounds in December but, for the year as a whole, the deficit was 46,385 million pounds which is only slightly lower than the record deficit of 46,630 million pounds in 2002.

The weakening of the pound against the euro during the year, apparently did little to stimulate exports to the European Union. In spite of the almost 10% decline in the average level of the pound against the Euro in 2003, exports to the European Union declined by 5%. In the areas outside the EU, exports rose over 8% in spite of a rise of almost 9% in the dollar/pound exchange rate.

It appears that sluggish demand in the EU area, particularly in Germany, and strong demand in the non EU area have played the more important role in determining British exports.

United Kingdom 
(Mil. Pounds)
Dec 03 Nov 03 Dec 02 M/M % or dif Y/Y 
or dif
2003 2002 2001
Trade Balance -3267 -3249 -2611 -18 -656 -35,814 -31,449 -27,620
  Goods  -4159 -4356 -3759 197 -400 46,385 46,630 40,620
    With EU -2753 -2179 -1825 -574 -828 -23,759 -20,695 -11,675
    With non EU -1406 -2177 -1924 771 518 -22626 -25,935 -28,945
    With USA 856 475 612 381 244 6,241 3,289 -27
  Services 892 1107 1148 -215 -256 10,571 15,181 13,000
Total Goods Exports  16,097 15,474 14,945 4.03 7.71 187,846 186,517 190,050
   To EU 8562 8582 8659 0.23 -1.12 104,869 109,855 109,710
   To non EU 7535 6892 6286 9.33 19.87 82,975 76,662 80,340
   To USA 2652 2309 2465 14.85 7.59 28,942 28,192 29,561
   To Germany 1742 1733 1693 0.52 2.89 20,709 22,068 23,647
Exchange Rate (Ave)
Euro/pound 1.4246 1.4426 1.5566 -12.5 -8.48 1.4456 1.5907 1.6088
Dollar/pound    1.7507 1.6801 1.5863 3.59 10.36 1.6346 1.5026 1.4700
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