LONDON - The Office for National Statistics (ONS) said that Britain's trade deficit in goods went north in the month of July. This was a negative move and upset the balance by bringing to naught the gain in June when the gap was seen to be narrowing.
The ONS said that the gap for July stood at £5.1 billion as against the £4.2 billion in June. However, this figure for the month of July was pretty close to that of May, the ONS said. But analysts have questioned the reliability of these figures as they could have gone haywire due to scams and frauds, "We've had a deterioration in the global balance, but there are still ongoing distortions from VAT-related fraud," said Mark Miller, an economist at HBOS Treasury Services. "The underlying trade position isn't that bad, but clearly it's being distorted at the moment in both June and July."
Missing Trader Intra-Community Fraud (MTIC) is tax evasion by companies that reclaim VAT, but then quietly disappear from the scene; the ONS acknowledged that this practice affects the final figures in that imports tend to be underwritten. "We've been trying to answer that ourselves too.
There isn't a simple answer - or not one that I've found. It might be partly due to MTIC, partly due to seasonal adjustment," said an ONS statistician. The agency also reported that both imports and exports were bound to rise in future. Howard Archer, an analyst with Global Insight noted that even with these figures exports were down in June, "Taken at face value, the data are not good news for UK growth prospects, given that net trade made a major contribution to the overall GDP expansion of 0.5% quarter-on-quarter in the second quarter," he said.
Posted
on : Sat, 10 Sep 2005 08:05 GMT | Business News
By : Anne Philips
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