(menafn – ecpulse) Today, the U.K. will release trade balance report for the month of June amid volatility in markets on the back of the European debt crisis which is threatening global recovery.
Visible trade deficit is predicted to widen to 8725 million pounds in June from 8363 million pounds in May, while total trade deficit will also widen to 3100 million pounds from 2717 million pounds shortfall.
For sure, British exports were severely affected by the slowdown in global growth, especially in the euro area which is U.K.s main trading partner.
Yesterday, the BoE Augusts quarterly inflation report stated that that global growth has slowed on the back of the European debt crisis causing a drop in U.K. exports, where the appreciation of the pound over the past year versus the euro has weighed on U.K. trade.
Looking at economic activities at home, it is clear that output is estimated to have contracted for three straight quarters, where output for the second quarter is predicted to be lower than in the middle of 2010, the inflation report said.
The British economy fell deeper into recession in the second quarter with a drop of 0.7% which followed a contraction of 0.3% in the first quarter.
In the same context, services sector eased expansion to 51.0 in July from 51.3 in June while manufacturing also saw a contraction of 45.4 last month from a revised of 48.4 a month earlier.
On the other hand, the pound strengthened against the euro, where the EUR/GBP started a downside direction since July 2011.
The BoE has revised down growth and inflation forecasts in the inflation report, raising speculations the bank may add to stimulus in the coming period to boost jolt the economy out of recession.