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At any given time, for most of the European economies you can find a positive economic story and a negative one. It’s particularly valid for the United Kingdom where speculation and predictions veer widely from one extreme to another.
This week we’ve seen a lot of positive news around increasing trade and negative ones warning of credit problems caused by the spectre of the European Referendum whenever that might occur. However it’s best not to dwell on the fears of the market as they are largely overblown so far into the future.
So what about the trade news? Well the positive signs are coming from the size of the UK’s trade deficit which finally seems to be heading downwards. In fact it’s falling a significant amount with the March figures falling from 3.1 billion pounds to a little over 1 billion. A huge fall in one of the UK’s problem areas – the trade deficit is estimated to knock nearly a percentage point from the quarterly economic growth forecast. So it is expected that this good news should filter through to the economic growth indicators for the second quarter of 2015.
It is the April figures that outshone the rest, and some optimists have predicted that instead of net trade being a drag on economic growth, they might in fact contribute to them in the future. This would be a huge surprise for most economists and perhaps point to a great increase in confidence particularly in manufacturing and their export markets.
UK growth will likely still be reliant on domestic demand, the improvement in most Eurozone economies over the last quarter will hopefully bring some positive benefits to the UK too. There are many signs that export volumes are increasing at a pace, this will partly be fueled by the increase in confidence in British companies over the last couple of years and some would suggest the shock Conservative majority.
The overall figures suggest that imports are falling rapidly and the exports are climbing. The fall in imports was largely due to other factors though particularly the falling commodity prices particularly oil – this also helped cut manufacturers costs and make British exports more affordable.
For further information on the UK economy, see the UK press and media.
UK Proxy Service – http://www.youtube.com/watch?v=7VYyV0vrTfM
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