The UK’s trade deficit has reached its widest level in eight years, with the UK exporting £104.7 billion more services than it imported.
Data from the Office for National Statistics (ONS) indicates that the trade deficit reached £37.7 billion last year, which is 1.8 per cent of the UK’s GDP.
This has increased from £25 billion in 2017, which was 1.2 per cent of GDP, while the current account deficit rose to 4.3 per cent of GDP.
The UK’s current account deficit has been financed by foreign capital investment, with the Bank of England warning that it could make the UK more vulnerable to a reduction in foreign investor appetite.
The UK has posted a current account deficit for the past 35 years because of a shortfall in the trade of goods. However, the UK generates a trade surplus for services, which account for 80 per cent of the economy.
The UK has the second-largest services trade surplus in the world, after the US, while the exports of services account for almost half of total UK exports.
The services market includes financial and insurance services, travel and transportation, intellectual property and business services, and has increased from 32 per cent of total exports to 46 per cent in the past 20 years.
Suren Thiru, Head of Economics at the British Chambers of Commerce, said: “This leaves the UK more exposed to sudden shifts in the economic conditions, including a disorderly departure from the EU.”
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