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£8.1bn fall in exports marks highest trade gap level in five years

Published 09/02/2016

In 2015 Britain's trade gap grew to its highest level in five years
In 2015 Britain's trade gap grew to its highest level in five years

Britain's trade gap grew to its highest level since 2010 last year as the UK saw an £8.1 billion plunge in the export of goods.

The Office for National Statistics (ONS) said the deficit - the difference in value between UK imports and exports - widened by £300 million to £34.7 billion in 2015.

This came despite an improvement in December, with the deficit reducing to £2.7 billion from a revised £4 billion in November.

But the narrowed trade gap showed little sign of a much-needed pick-up in exports, with the gap easing thanks only to a fall in imports.

Experts said the Government's target for £1 trillion worth of overseas sales by 2020 would be a "monumental challenge", while b usiness groups warned "much more needs to be done" to boost exports.

The ONS also confirmed that trade proved a drag on overall UK growth in the fourth quarter of last year and throughout 2015.

UK firms struggled to sell products abroad last year as the strong pound made British goods more expensive, while the global economic woes and slowdown in China added to the trade troubles.

The figures show exports of goods to the European Union fell by £11.6 billion between 2014 and 2015, as the weak euro made UK products more expensive.

Exports to China have fallen since 2011 and there are fears the sharp slowdown in China's economy will further hit the UK over the year ahead.

Allie Renison, head of trade policy at the Institute of Directors, said the rise in the deficit last year was "unsurprising given the sharp fall in the price of oil, which knocked British exports and made imports a little cheaper for British customers".

"Meeting the Government's ambitious target of £1 trillion worth of overseas sales by 2020 will be a monumental challenge," she added.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: " Much more needs to be done to improve our trading position, with particular emphasis on helping small businesses to start exporting, as well as helping firms to break into new export markets."

The ONS figures showed the deficit in the trade in goods hit yet another record high of £125 billion in 2015, widening by £1.9 billion from 2014.

This came after exports fell £8.1 billion to £285.6 billion and imports fell £6.2 billion to £410.7 billion.

Howard Archer, chief European economist at IHS Global, said recent weakness in the strength of the pound would help exporters by making UK goods more attractive.

But he added: "UK exporters will likely be seriously concerned by the current increasingly worrying global economic outlook.

"While the main concern has been centred on China and emerging markets, there are currently mounting worries over the prospects for growth in the developed countries amid heightened financial market turmoil."

A spokesman for the Department for Business, Innovation and Skills said: "Clearly there is work still to be done, as these figures make clear.

"This relates not just to conditions in the UK but to the fall in global oil prices, which has made trade and investment more volatile."

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