The trade deficit in the UK widened anew in July, according to data reported today by the Office of National Statistics (ONS). After a jump in exports lowered the June deficit to -£2.21 billion, the July deficit was -£3.43 billion, almost the same as in May. Exports were up 5.5% in June, then dropped back by 3.9% in July. Imports rose 0.5% in each month, almost completely accounted for by fuel imports.

The June gain in exports was in most kinds of goods and services and was mirrored by similar-sized reductions in July. This swing took place in trade with non-EU countries, especially the US, Japan and non-OECD countries. Exports to the EU-25 nations have been fairly stable for the last several months.

We also note a modest deterioration in the UK's trade balance in fuel. This is not recent, but occurred during 2004 when there was a marked rise in fuel imports. The value of fuel exports has also risen, but due only to the uptrend in prices. The volume of exports is decreasing, while that of imports rose markedly going into this year and has oscillated widely during 2005. The impact on import values is greater because import prices for fuel have been rising noticeably faster than export prices. Two-way trade in crude oil (the SUM of exports and imports of crude), measured in tonnes, has been largely constant at 9.5-10 million tonnes since at least 2002, despite the large changes in prices.