| Actual | Previous | Revised | |
| Balance | £-22.7B | £-23.71B | £-23.6B |
| Imports - M/M | -3.4% | 0.2% | 1.3% |
| Imports - Y/Y | 6.2% | 8.0% | 7.2% |
| Exports - M/M | -3.2% | 1.9% | 2.5% |
| Exports - Y/Y | -5.0% | -0.6% | -1.5% |
Highlights
December 2025 showed that imports fell by 3.4 percent over the month due to a moderation in EU trade. Exports, however, declined by 3.2 percent monthly, suggesting softer external demand conditions and potential headwinds in key global markets.
Trade with the United States diverged from the broader trend since UK exports to the U.S. increased modestly, while imports from the U.S. fell. This dynamic helped narrow the bilateral trade gap and provided a degree of external support amid broader export weakness.
Over the year however, imports rose by 6.2 percent, while exports fell by 5 percent, showing that import demand over the year is still increasing despite short -term decline. The fall in exports continue to reflects the UK's continued structural reliance on services, particularly professional, financial, and business services, to offset persistent goods trade imbalances. However, the faster growth in imports meant that the annual trade deficit widened slightly to £21.8 billion.
Overall, the trajectory points to recovery with constraints as trade volumes are improving over the year, but structural imbalances remain. Growth is returning, yet the external position continues to stay in deficit territory, leaving the UK sensitive to shifts in global demand and exchange rate movements.
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.