The UK's trade deficit is steadily improving, according to new figures.
A report by the Office for National Statistics (ONS) showed that the gap between the amount the UK imports and exports had narrowed in recent months. In August, the country's deficit in goods and services stood at £1.9 billion, a drop from the £3.1 billion recorded in July. However, the ONS noted that the narrowing was more due to a fall in imports as opposed to a rise in exports.
The latest figures represented the lowest level since April and were generated due to a surplus of £7.2 billion in services offsetting a £9.1 billion deficit in goods. The latter was £1.3 billion smaller in August compared to July. The nation's exports dropped 2.8 per cent over the course of the loss, representing a loss of £700 million but this excluded a 0.4 per cent reduction in oil.
One of the driving factors behind the recent figures was growth slowdown across Europe. The sanctions imposed on Russia in its role in the Ukraine crisis has taken it toll on the continent. Following fresh sanctions from the US and the European Union in August, Russia introduced a "full embargo" on food imports from the countries that had imposed the restrictions.
Analysts Markit noted that the sanctions on Russia are affecting countries across Europe. Even Germany, one of the financial powerhouses on the continent, is experiencing financial difficulties and could even slip into recession.
Commenting on the latest report, Chris Williamson, chief economist at Markit, said: "Growth has slowed sharply in the eurozone, with even Germany facing the possibility of a renewed recession.
"Sanctions with Russia are clearly hurting European trade while domestic demand in many euro countries remains in the doldrums, reflecting weak business confidence and high unemployment."
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