| Actual | Previous | Revised | |
| Balance | £-18.66B | £-26.05B | £-24.58B |
| Imports - M/M | -6.2% | -0.7% | -2.5% |
| Imports - Y/Y | 3.3% | 13.9% | 12.1% |
| Exports - M/M | 7.0% | 2.4% | 3.3% |
| Exports - Y/Y | 11.4% | 7.2% | 8.8% |
Highlights
The UK's trade position strengthened notably in May 2026, reflecting a broad-based improvement in external sector performance. The total goods and services trade deficit narrowed by £5.92 billion to £18.66 billion, signalling a significant easing of external imbalances compared with the previous month. This improvement was primarily driven by robust export growth, which outpaced import demand.
Goods exports increased by 7.0 percent month-over-month and 11.4 percent year-over-year, demonstrating resilient international demand for UK products across both EU and non-EU markets. The widespread nature of this growth suggests improving trade competitiveness and stronger global market penetration. Conversely, goods imports declined by 6.2 percent during May, although they remained 3.3 percent higher than a year earlier. The monthly decline reflected weaker imports from EU trading partners, partly offset by increased purchases from non-EU economies, indicating a gradual shift in the UK's import composition.
Indeed, the latest data point to a more favourable trade outlook, with export expansion and moderating import demand contributing to a narrower trade deficit. Nevertheless, the persistence of an overall deficit indicates that structural trade challenges remain, and sustaining export momentum while enhancing domestic productive capacity will be essential for achieving a more balanced and resilient external sector.
Definition
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.
Description
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.