Month-over-month, UK trade in December 2024 revealed that goods imports fell by 3.0 percent due to declining trade from EU countries and non-EU regions. Meanwhile, goods exports remained flat (0.0 percent), with declines in EU trade offset by increased exports to non-EU markets. The total trade deficit in goods and services remained very high at £17.45 billion in December but slightly improved from the revised £18.90 in November. This was attributed to a sharper decline in imports as export growth stagnated.

Year-over-year, goods imports declined by 2.1 percent, while exports fell by 7.9 percent due to declining trade with EU countries. Over the three months to December, goods imports rose 0.4 percent due to increased EU and non-EU trade. Also, EU and non-EU trade declines led to exports falling by 3.5 percent.

These trends underline the need for diversified trade strategies to strengthen non-EU partnerships, address EU trade challenges, and bolster the competitiveness of goods and services exports in a complex global trade environment. The latest update takes the UK RPI and RPI-P to 5, meaning economic activities are generally within market estimates.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Data are supplied by over 30 sources including several administrative sources, HM Revenue and Customs (HMRC) being the largest.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in the UK. Exports show the demand for UK goods in countries overseas. The pound sterling can be particularly sensitive to changes in the trade deficit run by the United Kingdom, since the trade shortfalls create greater net demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.

The UK's trade balance is particularly susceptible to swings in the oil account and so within the overall goods balance, financial markets will normally focus on the balance excluding oil and other erratic items.