Britain’s trade deficit hits a all time high
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- October 10, 2017
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British factories had their strongest two months of 2017 in July and August, suggesting the Bank of England remains on track to raise interest rates soon, but the deficit in trade in goods hit an all-time high.
The data showed Britain’s economy remained in a low-growth gear in the third quarter after suffering its slowest first half to the year since 2012.
However, the BoE said last month most of its policymakers thought it was likely that they would need to raise rates for the first time in a decade in the coming months.
The BoE believes last year’s Brexit vote will create more inflation pressure in Britain by slowing migration to the country and dampening business investment.
Most economists expect a first rate hike as soon as the Nov. 2 announcement of the outcome of the BoE’s next meeting.
The Office for National Statistics said on Tuesday manufacturing output rose by a monthly 0.4 percent in August, matching July’s pace.
The last time growth among manufacturers was stronger was in December of last year.
Overall industrial output – which includes the factory sector – rose by a monthly 0.2 percent in August, compared with 0.3 percent in July. Industrial output accounts for 14 percent of Britain’s overall economic output.
Figures for the much bigger services sector are due to be released on Oct. 25, along with a preliminary first estimate for third-quarter gross domestic product growth, little more than a week before the BoE’s Nov. 2 announcement.
Many economists say a shock weakening in those figures could cause the BoE to delay raising rates.
The ONS data showed Britain’s goods trade deficit with the rest of the world hit an all-time high of 14.245 billion pounds in August, pushed up by increased imports of chemicals, machinery and textiles.
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