"From ice cream to swimwear you can find UK holiday exports in travel destinations around the world", claimed Liam Fox the Trade Secretary this week.
The UK exported more than £302 million of holiday products including £160m of sunglasses, £93m of swimwear and £8 million of flip flops. Dr Fox confirmed his department was supporting British business. "Taking advantage of the growing global markets for home-grown summer essentials." Summer Loving! Excellent!
The Trade Minister is quick to spot the gap that British businessmen, "Fat, lazy and playing too much golf", are slow to exploit. Who would have thought Britain had a revealed comparative advantage in sunglasses and flip flops? It's nonsense of course. The UK has a trade deficit in sunglasses, swimwear and flip-flops. No rules of origin are included. Exports will include a significant proportion of imported product sold on to the unsuspecting Johnnie Foreigner, in the EU and elsewhere. The trade minister may lick his lips over the prospects for ice cream exports. At £16 million last year, ice-cream exports offer a wafer thin contribution to the structural trade deficit. . The ice cream surplus, melting in the reality of the £150 million import bill, according to Barry Gardiner, Labour Shadow International Trade Secretary ...
Trade deficit persists ...
The latest trade figures for June were released this week. The deficit trade in goods increased to £34.4 billion in the second quarter. It was up from £30.9 billion last year. The trade deficit is deteriorating, a result of the U.K structural deficit. We expect the deficit trade in goods to increase to just over £141 billion up from £134.1 billion last year. The forecast is unchanged from the prior quarter and from the start of the year. The vagaries of Sterling have little impact as we have long explained
The surplus in service sector trade increased to £25.4 billion in the quarter, up from £23 billion last year. For the year as a whole the trade surplus in services will be almost £100 billion, up from £97 billion last year. The UK has a revealed comparative advantage in business and professional services. It has a particularly strong RCA in financial services. Policy makers cling to the hope of a Sterling redemption for the trade deficit. Liam Fox cannot be blamed for the trade deficit. Holiday products on the beach, is not place to draw the line in the sand to mark the reversal of fortune.
Further news on manufacturing and construction were released this week. Manufacturing output increased by 0.6% in June. For the year as a whole we expect growth of 1.2% in 2017. Construction output increased by 0.4%. For the year as a whole, we expect growth of similar dimension. Service sector growth was up by 2.9% in April and 2.7% in May. We await the official estimates for June. For the quarter as a whole, the ONS estimated growth at 2.3%. This assumes a significant slow down in June ... down to 1.5%. Our own flash forecast is more optimistic for the quarter and for the year! Check out the library for the latest details ...
The Library is open ...
This week we launched the Saturday Economist Library. Articles, updates and forecasts are available on the web site. This section is in addition to the back copies of the weekly bulletin. Over 100 articles are included now available offering much more detail on some of the stories in the weekly update. In the library we deal with the issue of depreciation and the trade balance in some depth. We will also publish back stories on investment, productivity and construction. A great source of data.
We have had some great feedback with our Net Promoter Survey. Our NPS score is around 75 currently. We like this comment from Kirk R. "I like the unbiased opinion and agree with a lot of the points that are discussed which do not tow the party line. And this one from Ivan B. "Always an entertaining read and "usually" proves to be accurate!" Usually? Come on Ivan! I particularly like this one from Howard McWilliam ..
" I recommend it to all of my A Level Economics students. Technical language and concepts are accessible for all students and develops their ability to analyse, synthesise and evaluate. It also provides plenty of scope to stretch the most able."
Thanks Howard! Apologies to Chris P this week ... "It's a good concise window on the economic situation and West Wing WTF usually makes me smile".
Sorry Chris, no update on the West Wing this week, for the moment we can say ... "Hell hath no "Fire and Fury" like a president scorned". Trumps ratings plummet, the rant from the golf course seems like an out take from "Wag the Dog". Wag the Dog you may recall is the 1997 black comedy film starring Donald Trump and Steve Bannon. A president in trouble at home creates an imaginary war with Albania. Now read Korea/Venezuela/Ukraine/Germany/Canada/Mexico/China/. August is supposed to be such a quiet month!
Don't Miss the Economics Conference on the 13th October. Our theme is the Economics of Greater Manchester. We will be talking about the Inclusive Growth Challenge, Balancing the Books and the Sectors Driving Growth in the City Region! Another Great Conference in the pro-manchester series . We have a great line up of speakers to be announced soon. Book Now Don't Miss Out ...
Markets hate the noise of war. Markets take a hit as gold and the Euro prosper. That's all for this week. Have a great week-end ...
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The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.