UK trade gap largest in four months

The UK trade deficit widened to £5.01 billion in June 2025, up from a downwardly revised £4.55 billion in May, marking the largest gap since February. The deterioration reflected sharper falls in exports than imports, with both categories slipping to multi-month lows amid weaker global demand and sector-specific disruptions.

Overall exports declined 2.6% month-on-month to £74.76 billion, the lowest in six months. Goods exports contracted 6.3%, driven by a 3.0% drop in shipments to the EU, primarily due to reduced aircraft exports to Germany. Non-EU exports were hit harder, plunging 9.6% on the back of lower machinery and transport equipment sales.

Notably, car exports to the United States fell sharply, while the broader category of goods shipped to the U.S. — including precious metals — decreased by £0.7 billion, marking the weakest level since February 2022.

Service exports were comparatively stable, edging down just 0.2% to £46.03 billion, suggesting resilience in financial, business, and professional services despite softer goods trade.

Imports slipped 1.9% to £79.78 billion, a five-month low. Goods imports fell 3.5% to £50.89 billion, led by reduced purchases of office machinery from the Netherlands and cars from Germany, reflecting softer domestic demand and possible inventory adjustments. In contrast, service imports rose 1.0% to £28.88 billion, indicating sustained demand for foreign tourism, consultancy, and IT-related services.

While the narrowing in goods imports provided some offset, the steeper decline in goods exports amplified the overall deficit. The data highlight structural vulnerabilities in UK trade, particularly the heavy reliance on transport equipment and machinery exports to both EU and non-EU markets. The weakness in exports to the U.S. is notable given the country’s role as the UK’s largest single trading partner outside the EU.

Looking ahead, the trade balance will be shaped by the trajectory of global demand, currency movements, and ongoing trade negotiations — particularly with the U.S. and EU. Any resolution to U.S.–UK trade frictions, coupled with a rebound in transport equipment demand, could help stabilize export volumes. However, with global manufacturing activity still subdued, the risks remain tilted toward continued pressure on the UK’s external accounts in the near term.