So why is the news of an increased trade deficit disapointing? Here's why in 77 words:
- The Bank of England is hoping that a weak currency will boost exports. In fact exports have declined.
- A positive net trade could help boost growth in the economy especially as domestic demand remains muted due to high household debt levels and public sector cut backs.
- Over reliance on imports while the pound weakens will mean that we could end up importing inflation (i.e having to import more from abroad at an increasing cost).
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