In April 2025, the UK's trade landscape faced renewed pressure as the value of goods exports fell sharply by £2.7 billion (8.8 percent over the month) and fell by 7.1 percent over the year, driven by significant declines in shipments to both EU and non-EU partners. The standout drop was in exports to the United States, which plummeted by £2.0 billion, likely a direct consequence of newly implemented US tariffs, underscoring the sensitivity of UK trade flows to shifting global trade policies.

The value of goods imports rose slightly by 608 million in April, a rise of 1.2 percent over the month, but fell over the year by 2.3 percent. This was driven by a rise in imports from the EU offsetting a fall from non-EU countries, signalling a potential rebalancing of trading relationships post-Brexit. Notably, the goods trade deficit expanded to £60.0 billion, while the services trade surplus, traditionally a buffer for the UK, narrowed slightly to £48.5 billion.

Together, these figures highlight the UK's growing exposure to external trade shocks and the weakening role of services in offsetting goods sector vulnerabilities. The widening gap raises concerns for the country's current account stability. The latest update takes the RPI to 35 and the RPI-P to 24, meaning that economic activities remain well ahead of market expectations in the UK.

The trade gap is expected roughly flat at STG 20.0 billion versus STG 19.86 billion in March.

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.