Britain’s exporters narrowed the trade gap with the rest of the world in the second quarter to £4.8bn - the lowest quarterly gap for four years - despite the recent strength of the pound.
The Office for National Statistics said a £2.9bn increase in exports had helped to reduce the trade deficit in the April to June quarter by £2.7bn, compared with the previous three months.
Britain ran a £27.4bn deficit on goods such as chemicals and cars in the second quarter — but that was partly offset by a £22.6bn surplus in services, such as banking and management consultancy.
The news was a boost for the government’s drive to improve Britain’s export record, and create an economy that can “pay its way”.
Lee Hopley, chief economist at manufacturers’ group the EEF, said: “The UK’s trade performance adds to the generally positive data seen over the past month with the deficit narrowing and goods exports to both European and non-EU markets improving, especially to France, China and the US.”
The ONS said the improved trade performance reflected a £3.1bn jump in exports, driven by a £1.3bn increase in exports of chemicals, and a £1bn rise in sales of fuel. Machinery and transport exports - including cars, a sector where Britain is particularly strong - also increased.
The ONS pointed out that the cost of imports is declining, falling at an annual rate of 6.2% in June: evidence that the strength of sterling is making foreign goods cheaper, and helping to drive down inflation.
Mark Carney, the Bank of England’s governor, suggested on Thursday that the strength of sterling - which tends to bear down on prices - was one key reason why it was too soon for the monetary policy committee to start raising interest rates.
Howard Archer, of consultancy IHS Global Insight, said this effect was likely to continue into the second half of this year.
“Given that oil and commodity prices weakened markedly in July and sterling strengthened further, import prices have likely come down further since – this is something that the Bank of England is keeping a close eye on and if the trend persists, it would increase the chances that the Bank of England will delay raising interest rates past the first quarter of 2016.”
