U.K. Trade Deficit Narrows, But Fails to Meet Expectations

The U.K. August goods trade deficit came in far worse than expected, at GBP 8.20 bln compared to a median estimate for GBP 7.50 bln. The July deficit was revised sharply, to GBP 8.24 bln from 7.67 bln previously, and the July reading is now the worst monthly deficit on record. The EU27 goods trade balance improved however, tightening to GBP 3.03 bln from 3.45 bln while non-EU trade deteriorated to show a deficit of GBP 5.17 bln versus 4.79 bln previously. Overall, no real indication that a weaker Pound is having an impact on the U.K. trade deficit, with falling global demand taking its toll.

U.K. HBOS House Price Index Slips to Record Low, Housing Downturn to Linger

The U.K. HBOS house price index fell to a record low of -12.4% in September, which suggests that home prices may decline further throughout the rest of the year as banks continue to cutback on lending practices. Indeed, the intensification of the credit crisis has led central banks all over the globe to lower their respective benchmark interest yesterday, but the lack of recovery in the credit sector may continue to drive home prices lower as mortgage lenders hoard their cash.

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