UK trade deficit widens unexpectedly in June

Official UK data show that Britain’s trade deficit has widened more than expected in June, after British exports fell more than imports.

The Office for National Statistics (ONS) released the data on Friday, showing that UK’s goods trade deficit rose to 9.4 billion pounds from 9.2 billion pounds in the previous month, May.

According to the ONS data, exports fell by 400 million pounds in June to 23.5 billion, largely driven by a fall in oil exports and manufacturing goods. This is while imported goods dropped by 100 million to 32.9 billion pounds after a drop in oil and aircraft imports.

The June data came as a surprise, as economists had expected the country’s trade deficit to shrink to 8.8 billion pounds.

The economists said the widening of the deficit could be due to a weak eurozone economy and tensions between Russia and the West over the crisis in Ukraine.

“In particular, UK exporters will be perturbed by current worrying signs that already weak eurozone growth is faltering anew as deteriorating relations with Russia and tit-for-tat sanctions weigh down on confidence,” said Howard Archer, chief UK and European economist at IHS Global Insight.

The June data is also seen as a setback for the British government as UK Chancellor George Osborne has long argued that a sustainable future for the country’s economy depends on measures such as a greater reliance on manufacturing and exports. Osborne set a target two years ago of doubling UK exports to 1 trillion pounds by 2020.