Surprise fall in UK's trade gap

kennyboy66_2

I'd say that it will take 9 months for exporters to start benefiting. Usually the first effect is that a fall in sterling sees the trade deficit get worse before getting better (as happened in November). Exports actually fell by 6% in November, so I won't be getting too excited by a small increase.

However one in the eye for the loons that think that a lower pound is part of the problem and not part of the solution (usually followed by the "we don't make or export anything anyway" nonsense).

Generali

New_Gold_Dream wrote: »

I don't agree with this, how can a bit of noise skew the figures of such large numbers What do you do generali?

At present I'm an unemployed Australian resident. My last job was running the business side of a hedge fund and prior to that I spent 12 years in investment banking. Before that I did a degree in economics (with economic history and a little psychology).

You?

Conrad

Does nayone have much insight as to our current net income inflows? In the past Ive read these flows largely offsett our trade defecit.

Generali

New_Gold_Dream wrote: »

I wasn't questioning your argument, was just disagreeing.
Obviously you have a lot of experience where money is concerned.
I own 3 properties near malaga which we let, we try to rent to professionals on long term rents where possible but do let to tourists too.
I am semi retired even though i am only 37. I do still work but only part time. When i worked full time i designed video games in liverpool.

Feel free to disagree with me. Most people do, including the little Generalissimos!

I have a lot of good theory with money. You have a lot of good practice in a certain sort of landlording.

Good luck with your business!

WTF?_2

Cannon_Fodder wrote: »

http://newsvote.bbc.co.uk/1/hi/business/7880829.stm


The UK's deficit on trade in goods with the rest of the world fell to an 18-month low in December.

Britain's goods trade gap fell to £7.367bn from a record £8.114bn in November, the Office for National Statistics (ONS) said.

That was the lowest the gap - the difference between imports and exports - has been since June 2007 and was well below analysts' forecasts of £8.1bn.

The narrowing gap was driven by a 2.5% fall in imports.
The ONS said the fall in demand for overseas goods may have been as a result of the weak pound, however, it also noted that the deficit was coming down from a record level in November.

Total exports were up slightly in December, 0.5% higher than the previous month.


The ONS provisionally estimated the trade deficit for 2008 as a whole at £93.2bn, compared with £89.3bn in 2007.

'Surprisingly upbeat'

Analysts welcomed the data but were cautious about the overall economic outlook.

"The latest UK data gave a surprisingly upbeat picture of the economy around the turn of the year," said Vicky Redwood from Capital Economics.

"Overall it's nice to have some good news for a change. Sadly we're unlikely to get much more," she added
Howard Archer from Global Insight said: "The bad news is that this narrowing in the deficit was due to weakness in imports rather than strength in exports."

Hmmm, how is the fact that with economic uncertainty, less credit around to buy luxuries and a much weaker sterling (therefore higher prices on imports) - that the trade gap narrowing is a 'surprise' to these guys?

kennyboy66_2

!!!!!!? wrote: »

Hmmm, how is the fact that with economic uncertainty, less credit around to buy luxuries and a much weaker sterling (therefore higher prices on imports) - that the trade gap narrowing is a 'surprise' to these guys?

After last months terrible trade stats were released you said this.

"This was always going to be the problem in an economy so dependent on imports - in time things will adjust but there's going to be a horrible adjustment period. Thus the standard 'easy way out' of devaluation has proven to be not quite the clear, fast-acting winner it once was.

As anticipated, even with more competitive exports due to a weaker pound there's not a lot of export potential out there right now and we will shortly be experiencing the problems of importers having to pay more for new stock.

In the short term, a weaker pound will hurt a lot more than it helps."

Have things changed so much in a month, that you could have predicted this ?

WTF?_2

kennyboy66 wrote: »

After last months terrible trade stats were released you said this.

"This was always going to be the problem in an economy so dependent on imports - in time things will adjust but there's going to be a horrible adjustment period. Thus the standard 'easy way out' of devaluation has proven to be not quite the clear, fast-acting winner it once was.

As anticipated, even with more competitive exports due to a weaker pound there's not a lot of export potential out there right now and we will shortly be experiencing the problems of importers having to pay more for new stock.

In the short term, a weaker pound will hurt a lot more than it helps."

Have things changed so much in a month, that you could have predicted this ?

How does any of that conflict with what I said above about it being obvious that the trade gap would narrow with a falling pound? Spell out your thinking here.

IveSeenTheLight

oops double post


http://news.bbc.co.uk/1/hi/business/7880829.stm

purch

In the short term, a weaker pound will hurt a lot more than it helps."

I said above about it being obvious that the trade gap would narrow with a falling pound?

The comedic value of this forum is vastly underrated !!!! :rotfl:

WTF?_2

purch wrote: »

The comedic value of this forum is vastly underrated !!!! :rotfl:

The article makes it clear that the gap narrowed due to a large fall in imports, exports improved only slightly.

The 'hurt' is already here and it is coming in the form of higher prices of many consumer goods (electronics goods have been discussed here on a couple of occasions) or the fact that prices aren't dropping as much on goods as they should (fuel springs to mind here). We'll probably see even more price increases on imports filtering in over the coming months as retailers restock too.


Until we see a marked improvement in exports or we can see production of goods for domestic consumption to replace imports increase, you can't argue that the collapse in Sterling has helped any. Given the generally rubbish outlook for international trade, that will be very hard to confirm. In any case, it will take longer for that to pick up.


I therefore stand fully behind my comments that "In the short term, a weaker pound will hurt a lot more than it helps."