Oil imports push trade deficit to £4.4bn

18-07-2006

Oil imports push trade deficit to £4.4bn
Britain became a net importer of oil in May pushing the trade deficit to £4.4 billion, government figures have shown.

The Office of National Statistics (ONS) said this morning that the UK's oil account dipped to a deficit of £300 million from a surplus of £200 million in April.

Overall, the trade deficit in goods and services increased by £1 billion in May.

"Exports of oil were little changed but imports rose by £0.5 billion reflecting lower production and some stock building of crude oil," the ONS said.

Trade in services showed a surplus of £2.3 billion in May, up £200 million on April.

The deficit on trade in goods hit £6.8 billion, up from a deficit of £5.6 billion the previous month.

News that the UK is importing more of its oil will cause concern among business leaders and the government, as prices remain high amid political unrest in key oil-producing regions.

Higher energy costs represent an inflationary pressure for the economy, which could prompt the Bank of England to cut interest rates.

Consumers have already seen significant increases in the cost of household energy bills as a result of rising wholesale prices.

Meanwhile, the security of future supplies was one of the main drivers behind yesterday's long-awaited energy review in which the government said it would seek to boost energy efficiency and push renewables.

Nuclear energy though remains an option as the UK seeks to avoid an over-reliance on foreign governments to meet its future energy needs.

Research by Datamonitor revealed that the country's biggest energy users were broadly in support of the government's policy of backing renewables, encouraging efficiency and keeping the nuclear option open.


Related categories: Management / Business, Banking / Finance, Manufacturing / Industry, International / Overseas.


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