UK £6 Billion Worse Off After Multi Billion Pound Gold “Accounting Error”

December 8, 2016

Oops! Experts’ £6 Bln blunder sends UK trade deficit soaring. UK failed to measure huge imports of gold coins and bars after Brexit vote.

Britain’s trade deficit with the rest of the world is £6 billion larger than previously thought — and at a record high — because the nation’s bean counters made a mistake in their sums.

The problem was found in the collection of “non-monetary gold” data, which measures the amount of gold traded privately rather than used in jewellery

The Office for National Statistics yesterday admitted to a big “processing error” that meant it had miscalculated the value of everything that the country exports and imports for almost two years. For the three months to September, the correction catapulted the trade deficit from £11 billion to £17 billion, the worst since records began in 1955.

The error comes at a particularly sensitive time for the ONS and the trade series in particular, which is being watched closely for signs of an export revival after the fall in sterling since Brexit.

The Bank of England and the Office for Budget Responsibility expect an improvement in the UK’s trade to cushion the economic blow of voting to leave the European Union. However, the ONS’s mistake appears to have masked a catastrophic collapse since June.

The problem was found in the collection of “non-monetary gold” data, which measures the amount of gold traded privately rather than used in jewellery. For every other quarter from the start of 2015, the corrected numbers improve the trade picture, suggesting that UK investors have been net sellers of gold. Since Brexit, the data shows that they have become large importers of the dollar-denominated asset in an apparent flight to safety.

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Philip Aldrick is Economics Editor of The Times, London.

China is poised to become world's biggest gold consumer.