12th November 2026
Britain's trade position deteriorated significantly during the third quarter of 2026, with imports rising much faster than exports and the overall trade deficit widening by £6.2 billion.
The latest figures from the Office for National Statistics (ONS), covering September and the three months from July to September, highlight a continuing weakness in Britain's trade in physical goods. They also demonstrate how heavily the country relies on its services sector to support its international trading position.
The figures raise important questions about Britain's industrial competitiveness, its dependence on overseas suppliers and whether the country is producing enough of the goods it needs.
Imports are growing faster than exports
During the third quarter, the UK exported goods and services worth £245.5 billion, while imports reached £255.9 billion.
That left an overall trade deficit of £10.4 billion, compared with a deficit £6.2 billion smaller in the previous quarter.
The problem is particularly apparent in goods trade.
Britain imported £168.2 billion worth of goods during the quarter but exported only £106.7 billion. The resulting deficit of £61.5 billion was £6.1 billion wider than in the second quarter.
Goods imports increased by 3.5%, while exports actually fell by 0.4%.
In other words, Britain bought considerably more from overseas while selling slightly less.
The September figures offered some encouragement, with goods exports increasing by 6.5% compared with August. However, imports increased by an even greater 6.9%.
These monthly improvements need to be considered alongside the less encouraging quarterly picture.
Britain's dependence on imported goods
The composition of imports provides some clues about what is happening.
Imports of machinery and transport equipment from countries outside the European Union increased substantially during the third quarter. The ONS recorded a £4.4 billion rise in this category, including more cars from China and aircraft from the United States.
There were also increases in imports of manufactured goods, chemicals and consumer products.
China remains an important source of manufactured goods, while the UK also relies on international suppliers for machinery, equipment and many industrial components.
This is not necessarily a problem in itself. International trade allows businesses and consumers to access products that may be cheaper or unavailable domestically.
However, dependence on imported goods can become a weakness when supply chains are disrupted, international tensions increase or exchange rates and transport costs move against the UK.
Recent experience has demonstrated how quickly international events can affect the cost and availability of essential products.
The services sector provides some relief
There is considerably better news in Britain's services trade.
Financial services, insurance, professional services, business consultancy, telecommunications and computer services all contribute to Britain's international earnings.
During the third quarter, exports of services were worth £138.8 billion, compared with imports of £87.7 billion.
This generated a substantial surplus of £51.1 billion.
Without this contribution, Britain's overall trade position would be much worse.
However, the services surplus narrowed slightly during the quarter because imports of services increased faster than exports.
Financial services and other business services made important contributions to export growth, alongside travel, transport, insurance and computer-related services.
Britain has developed considerable international strength in these areas, particularly in London and other major business centres.
The challenge is ensuring that this success is accompanied by sufficient investment and productive capacity in the industries that manufacture physical goods.
Energy prices add to the pressure
Energy is another important part of the trade picture.
The ONS highlights the effect of higher fuel prices on the difference between the value of trade and the actual volume of goods being imported and exported.
The continuing impact of the conflict in the Middle East has contributed to higher fuel import costs.
Although the value of fuel imports fell slightly in the third quarter compared with the previous three months, it remained high compared with the same period a year earlier.
For a country that remains dependent on imported energy, this creates an additional vulnerability.
Higher energy prices affect not only the cost of importing oil and gas but also the competitiveness of domestic manufacturers, whose production costs can rise as a consequence.
This is particularly relevant to energy-intensive industries, where international competitors may have access to cheaper and more reliable supplies.
What does this mean for British industry?
The figures arrive at a time when the UK economy is facing considerable challenges.
Manufacturing, construction, energy and other productive industries all need investment if Britain is to increase its domestic production and compete more effectively internationally.
There is a long-standing debate about whether Britain has become too dependent on services and allowed too much of its manufacturing capacity to disappear.
The latest figures do not provide a complete answer to that question, but they illustrate the imbalance.
A strong services sector is an important national asset. However, it cannot automatically replace the economic benefits of producing machinery, industrial equipment, vehicles, chemicals and other goods at home.
Nor should the objective necessarily be to manufacture everything domestically. International supply chains are an essential part of modern economies.
The important issue is identifying where Britain has the skills, resources and commercial opportunities to produce more of what it currently imports.
For Scotland, this has particular relevance to energy, engineering, food production, advanced manufacturing and the supply chains supporting offshore developments.
Caithness and the wider Highlands have opportunities in energy infrastructure, engineering, fabrication and the supporting services required by major projects. However, securing a lasting economic benefit depends on ensuring that more of the investment translates into work for businesses and people in the local economy.
A warning rather than a verdict
There are some encouraging signs in the September figures, particularly the increase in goods exports to both EU and non-EU markets.
But the quarterly figures tell a less comfortable story.
Imports are increasing faster than exports, the goods trade deficit is substantial and Britain's services surplus is doing much of the work in keeping the overall deficit under control.
The ONS also cautions that some of the services figures are estimates that will be revised as more complete information becomes available. Individual monthly movements should therefore not be treated as evidence of a lasting change in direction.
Nevertheless, the broader question remains.
Britain cannot rely indefinitely on its services sector to compensate for weaknesses in the production and export of physical goods.
If the country wants a more resilient economy, it needs to strengthen its productive capacity, encourage investment and make it easier for competitive businesses to manufacture and export from the UK.
The latest trade figures suggest that there is still considerable work to do.
Read the full report HERE