However, the UK’s trade balance is still in trouble as foreign gas prices rise.
In June, UK imports of Russian fuels fell to zero as Britain reduced Vladimir Putin’s energy supply.
According to the Office for National Statistics, imports of fuels, which are “historically important commodities for trade with Russia”, totalled £0.0bn at the end of the second quarter.
Imports from Russia fell overall and reached their lowest level in 25 years.
This happened as the UK’s trade deficit increased to a record £27.9bn due to inflationary pressures, and surging fuel imports.
Britain has had significant Russian energy imports in the past. They accounted for 4pc, 9pc, and 27pc respectively of all UK gas, oil, and coal consumptions last year.
It has not been as dependent on the Kremlin’s power as other European countries.
The UK and EU joined forces to impose sanctions on Russian coal, oil, and have pledged to reduce dependence on Russian gas.
Despite stagnant direct import numbers, it is possible that Britain continues to import Russian oil as part “blended” products which mix crude from different sources.
According to the ONS, total UK imports increased by £14.3bn and £206.6bn during the second quarter. However, exports increased £12.3bn and PS178.6bn. The deficit, which is the difference between imports and exports, was at its highest since 1997.
Pantheon Macroeconomics reported that the deficit in the first half of 2022 was the largest as a percentage of GDP in any consecutive quarter since at least 1955. These figures show how severe the surge in commodity prices triggered by the invasion from Ukraine was.
Pantheon’s chief UK economist Samuel Tombs said that the worst was yet to come for Britain’s trade balance due to the soaring cost of energy and manufactured goods.
He said that “all told, the trade data were grim” and would worsen over the next months. This will make sterling more vulnerable than ever to any decrease in overseas investors’ willingness to finance this excessive consumption.
According to ONS statisticians, the Q2 deficit would have been reduced to £22.6bn if inflation was adjusted. This deficit equalled 4.5pc nominal GDP, a decrease of 5.4pc from the first quarter.
In June, imports of fuels from the EU increased by £0.4bn while those from outside the bloc rose by £0.5bn. This was due to higher imports of oil and gas from the US as well as from Norway.
In June, goods exports dropped 8pc, while imports decreased 1pc. Exports fell 2.1 percent in the first half of this year while imports were 8.8 percent higher.
Due to a rise in fuel exports to £2.7bn, EU exports increased. As European countries seek to increase fuel stocks before winter, the UK reexported large amounts of gas to the continent via pipelines to Belgium and the Netherlands.
Early estimates showed that the UK’s trade surplus in services fell by a little, falling from £0.5bn down to £34.7bn in the quarter. This was due to an increase in imports exceeding rising exports.
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