UK exports bolstered in Q4 2016 by decline in sterling

Imports and Exports | | MIC Customs Solutions |

The weakness of the pound bolstered the UK's export performance during the final quarter of 2016, new data has shown.

The UK's export performance during the final quarter of 2016 saw an uplift due to the falling value of the pound.

Data from the British Office for National Statistics has indicated that the country's trade deficit fell to £12 billion (€14.08 billion) during the fourth quarter, down from £25.7 billion in Q3. This equated to 2.4 per cent of GDP, the lowest level since the second quarter of 2011.

According to the government report, the drop in the value of the pound since the UK voted to leave the European Union last June was the main driver of the narrowing in the gap between exports and imports, as UK goods are now priced more competitively in overseas markets.

Howard Archer, an economist at consultancy IHS Markit, said: "Sterling's marked weakening appears to be increasingly feeding through to lift exports, helped by current decent global demand. Additionally, the trade deficit should be limited by softening domestic demand limiting imports."

However, the UK's formal commencement of the process of leaving the EU last week raises considerable doubt about its future trade prospects and its capacity to attract investors from abroad.