UK trade deficit narrows
The UK's deficit on global trade in goods and services has narrowed, after HM Revenue and Customs (HMRC) confirmed June's figures had been distorted b
13:04 09 August 2005
The UK's deficit on global trade in goods and services has narrowed, after HM Revenue and Customs (HMRC) confirmed June's figures had been distorted by the inclusion of VAT fraud.
The deficit narrowed to 2.5 billion from 3.5 billion in May, with second quarter deficit narrowing to 9.7 billion from 10.4 billion in the previous quarter.
The HMRC says tax fraud did affect the figures, although the extent of the fraud is not yet clear.
Statisticians have had to make adjustments, which may have to be revised again later on.
"Fraud leads to under recording of imports as fraudsters import goods, which they then sell on before disappearing without paying VAT on that sale," said the HMRC.
"The goods are eventually exported back to the EU. Such exports are declared so VAT can be claimed back," it added.
The figures suggest that the UK trade deficit has been fairly flat in recent months.
The deficit with EU countries in June was 2.8 billion compared with 2.7 billion in May, though the deficit with non-EU countries in June was 1.4 billion compared with 2.3 billion in May - the smallest non-EU deficit since April 2003.