Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth

Will Straw explores the release of the UK's trade figures today, and asks what they mean for the chancellor's claim that the Eurozone is to blame for our shrinking GDP.

 

While both Germany and Japan have reported bad news on trade in recent days, the UK’s export performance has picked up. New figures released today undermine George Osborne’s claims that the Eurozone was to blame for the contracting British economy.

Trade figures released this morning by the Office for National Stastics show that the UK’s trade deficit was £1.1 billion in December compared with a deficit of £2.8 billion in November. This is the smallest deficit in nine years.

The deficit in traded goods to the European Union fell from £3.9 billion to £3.4 billion while the deficit in goods to the rest of the world fell from £5.0 billion to £3.7 billion. These changes were primarily driven by a drop in imports but exports were up by £200 million – with an equal contribution to the EU and elsewhere.

Last month’s figures for growth in the fourth quarter of 2011 showed that overall economic activity had fallen by 0.2 per cent. At the time, George Osborne blamed the Eurozone crisis for the decline but figures released by the House of Commons library a few days earlier had shown that over the course of 2011, growth in trade was all that kept Britain growing.

As Guido Fawkes has noted,

“It is a myth that the decline in GDP has anything to do with the €uro-crisis leading to a decline in exports to the €urozone. The barriers to growth are a domestic problem.”

The Bank of England remain sufficiently worried about the economy to announce a further £50 billion of quantitative easing. According to the Telegraph, the ONS indicated today that the positive trade figures and a boost for manufacturing were not enough to change the first GDP estimate for the fourth quarter of 2011, which showed the economy shrank by 0.2 per cent.

But they do make it less likely that Britain has avoided a technical recession by growing in the first quarter of 2011. For once, the OBR may find that their predicted rise in GDP of 0.1 per cent in this quarter is accurate. The chancellor will certainly hope so.

See also:

Economic Update – February 2012: Double dippedTony Dolphin, February 7th 2012

US grew almost twice as fast as UK in 2011Will Straw, January 27th 2012

The double-dip beginsTony Dolphin, January 25th 2012

Hopes of an export and manufacturing-led recovery recedeTony Dolphin, August 9th 2011

What an export-led recovery may mean for the worldNick Dearden, January 25th 2011

31 Responses to “Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth”

  1. Pulp Ark

    Positive trade figures undermine Osborne’s claim that… http://t.co/KiLzaRxF #Sustainable_Economy #double_dip #eurozone #muslim #tcot #sioa

  2. Will Straw

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  3. Liz Kendall MP

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  4. Chris Bradley

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  5. Glynnbo

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  6. LucaHelvetica

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  7. Richard Darlington

    '+ve trade figures undermine Chx’s claim that Eurozone to blame for -ve growth' argues @IPPR @wdjstraw on @leftfootfwd http://t.co/DUzzY7mx

  8. James Morris

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  9. Peter Savage

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  10. Lynn Sheridan

    Strong exports undermine Osborne’s claim that Eurozone is to blame for shrinking GDP, writes @wdjstraw: http://t.co/cNrUHn7I

  11. Michael Drummond

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  12. Anonymous

    “But they do make it less likely that Britain has avoided a technical recession by growing in the first quarter of 2011.”

    Shouldn’t that be 2012?

  13. Nicholas Ripley

    Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth http://t.co/k2DdDOl4

  14. A Name

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  15. sulaiman ritchie

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  16. William Bain

    RT @leftfootfwd: Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth http://t.co/BeHyF0II

  17. Suella Ember

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  18. Yrotitna

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  19. Andrew Hair

    RT @leftfootfwd: Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth http://t.co/FuUvKIY5

  20. Natacha Kennedy

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  21. Stephanie Mather

    My latest blog shows how positive export figs undermine Osborne’s claim that Eurozone is to blame for shrinking GDP: http://t.co/22NZARTh

  22. Legal Aware

    @Frances_Coppola I meant the trade deficit improved – but still destroys your basic argument utterly http://t.co/LmWafM9p

  23. Cioni

    ‘But they do make it less likely that Britain has avoided a technical recession by growing in the first quarter of 2011.’ – and shouldn’t it be MORE likely that we have avoided a recession? Surely positive trade and a boost for manufacturing is a good thing…

  24. Will Straw

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  25. Martin Hinds

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  26. Dave

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  27. Jessica Blanck

    RT @leftfootfwd: Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth http://t.co/LL9HABYj

  28. Liza Harding

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  29. grahame whitfield

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  30. Liam O'Donnell

    Osborne tries to claim that eurozone crisis is drain on UK growth. But last year it helped ensure that Britain grew: http://t.co/I8qOuHze

  31. Osborne wrong again in passing buck to Eurozone | Left Foot Forward

    […] should remember that this is not the first time that Osborne has wrongly tried this trick. No wonder the shadow Chancellor, Ed Balls, says today: […]

Leave a Reply