The past six weeks have seen a renewed Russian offensive against Ukrainian port infrastructure and vessels, leading to plummeting exports – a hit to the world’s supplies of both wheat and corn, as well as Ukraine’s war economy.
A series of data releases paint a positive picture for UK growth and trade volumes, although economists foresee a fall in employment and a rise in inflation in the months ahead.
Ukraine grain exports fall
New export routes are needed to enable Ukraine to continue exporting this year’s grain harvest, the country’s agricultural ministry has warned.
Russian attacks on the country’s Black Sea port infrastructure have severely diminished grain exports this summer, which were down 75% on the previous year for the first two weeks of August, Reuters reports.
The Ukrainian Port Administration said there were more than 70 attacks on infrastructure and 62 on vessels during July and the first half of this month. Approximately 90% of Ukraine’s agricultural exports travel by sea.
The Romanian and Bulgarian Black Sea ‘grain corridor’, in place since 2023 when Russia exited the UN and Turkish-brokered Black Sea Grain Initiative, is no longer a guarantee of delivery.
As agriculture accounts for around 60% of the country’s export revenues, the Russian blockade also risks damaging Ukraine’s war economy.
The head of the country’s leading farmers’ union warned that countries across Africa and the Middle East could be at risk of famine, as leading importers of Ukrainian grain, which accounts for 6% of the world’s wheat exports and 11% of its corn.
Diminished exports could also inflate world food prices, according to Ukrainian agriculture minister Taras Vysotskyi.
“If it keeps going like this, you’ll have once again a global price increase of at least 25%, 30%, with all the consequences we had in 2022 for world food inflation.”
UK growth
Good news for chancellor John Healey, as UK GDP rose 0.4% between April and June according to the Office for National Statistics (ONS).
Both manufacturing and services grew in Q2, with the ONS describing growth as “relatively robust”.
Hot weather and the FIFA World Cup were also cited as responsible for the boost, with businesses involved in “the manufacture of alcohol, wholesale, food and beverage serving activities, publishing activities, television production and advertising” all experiencing an uptick.
This quarter’s growth still reflected a slowdown when compared with Q1’s 0.6% GDP increase. This was attributed to economic challenges stemming from the Iran war and political uncertainty surrounding former prime minister Sir Keir Starmer’s leadership.
Despite the strong start to the year, economists have warned of challenges ahead, with inflation and unemployment set to rise.
Healey framed his response to the news around the cost-of-living crisis, saying that he knows “people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses”.
Shadow chancellor, Sir Mel Stride, blamed Labour’s decision-making for leaving the UK economy “weak and vulnerable to the effects of shocks like the Iran War”.
UK trade stats
According to the ONS’ quarterly trade data, the value of UK exports increased by £5.5bn (5.7%) in the last quarter, while imports also rose by £6.7bn (4.3%) in the same period.
“This rise was because goods exports to the EU increased by £2.5bn (5.3%) and goods exports to non-EU countries rose by £3.0bn (6.1%)”, the ONS said in the Q2 report.
Chartered Institute of Export & International Trade director general, Marco Forgione, said
"The latest ONS trade data underlines both the opportunity and the challenge facing the UK. While goods exports rose over the quarter, driven by trade with both EU and non-EU markets, the overall goods and services trade deficit widened again to £8bn as imports continued to outweigh exports."
When looking at the latest monthly data, the ONS found that the EU continues to dominate the UK’s exports, accounting for 51% of its total exports in June (when discounting non-monetary gold). Exports to the EU were also down slightly (3%) on last month, but increased by £1.5bn (10%) compared to the same month last year.
China remained “the UK’s largest export partner country by value”, accounting for 14% of total UK exports, an increase of £4.3bn (4%) on June last year.
The US also remained the country's second-largest export partner, accounting for 13% of total exports. The value of British exports to the US rose significantly between June 2025 and 2026, up 23%.
The country’s top export became mechanical appliances, while precious metals fell to second place. Mineral fuels remained in third place.
Elsewhere in the trade headlines
- Indian farmers concerned as key markets rejecting or inspecting agri-exports, writes Al Jazeera
- Columbian coffee exports disrupted by Monday’s (10 August) earthquake near the major city of Cali
- US inflation eased slightly in the year to July, with prices rising 3.4% compared to 3.5% in the year to June
Yesterday in Trade
- The US ambassador to the EU criticised Brussels’ carbon border tax as a “double standard” in an FT op-ed
- Research by the European Commission raised concerns about food price inflation as a result of new pesticide rules on agri-imports
You can read those stories here.
