Britain's Exports Drop as Trade Deficit Expands

Sales of commodities and chemicals were down significantly in Britain resulting in a wider trade gap then expected, as exports in the country plunged.

The trade gap for January surged to about $12 billion, far beyond what had been projected and expected by analysts.

Most economists thought the trade gap would be less, primarily because of the decrease in value of the pound, which under normal circumstances in any country would generate more exports. For some reason that didn't happen, resulting in the growing trade gap in Britain.

The drop in exports wasn't small either, as the 6.9 percent fall was the worst performance for exports in the country in over three years. There were no explanations or understanding of why this happened from the statistics office in the country.

Trying to smooth over the disastrous numbers, the minister for Trade, Investment and Small Business, Mervyn Davies said this, "You cannot read too much into any monthly trade figures. The overall long-term export figures are good, with exports rising by 2.6 billion pounds to 60.3 billion pounds in the last quarter.

"The different value in sterling will take some time to feed through to improved export performance and the full benefits will not be seen until demand in our main markets picks up more strongly."

Of course all of this will depend upon the performance of the pound over the next several months in the short term.
 
Still, the large percentage is troubling, as it's hard to account for that being just an anomaly. It won't take long to find out if British exports are in fact taking a beating based on its trading partners being in worst shape than being portrayed, as spending may continue to be down in those nations, which is one likely scenario to consider at this time.