UK trade surplus with EU

Car exports have been hit by the industry slowdown

Trade figures released on Friday have shown that UK firms are exporting more to the continent than they are importing.

In the three months to October, the UK sold £32m worth of goods more to Europe than it bought, the first trade surplus for almost 20 years.

In the previous three months, the trade deficit between the UK and Europe was £441m.

The good news for the UK is that the eurozone recovery seems to be intact

Jeremy Hawkins, Bank of America

The surplus, however small, is evidence that UK exporters may be overcoming the recent strength of the pound, which made their products more expensive on foreign markets.

The figures, from the Office of National Statistics, also showed that the trade gap with the rest of the world, at £2.5bn, was broadly steady.

When the contribution from services - which covers industries such as accountancy, advertising, hotels, travel and leisure - is added in, the gap with non-EU countries narrowed to £1.5bn in October, from September's £1.7bn.

"The good news for the UK is that the eurozone recovery seems to be intact," said Jeremy Hawkins, economist at Bank of America.

"This will be improved by a stronger euro, and we could see a shift with stronger export penetration into Europe, offsetting weaker markets in the rapidly cooling US economy," he added.

Breakdown

Imports from non-EU countries rose, while imports from Europe fell, with the biggest increases coming from the USA, China, Japan, South Korea and Taiwan.

UK exports to non-European countries, especially to the USA, Japan and Saudi Arabia, rose faster than those to Europe.

The precarious state of the car industry - highlighted most recently by General Motors announcement that it was ending production of Vauxhall cars at Luton - was reflected by data showing that UK car exports fell by 19% in the three months to October.

But imports of cars also dropped by 9.5% in the period reflecting a slump in world demand.