Belfast Telegraph

Export boost for Osborne

New trade figures bolster Chancellor's pre-Budget plans

By Jamie Grierson

Chancellor George Osborne's plans to rebalance the economy received a pre-Budget boost yesterday as figures showed the UK exported a record level of goods to countries outside the European Union such as the US and China in January.

And while the trade deficit on goods and services - the gap between exports and imports - widened to £1.8bn in January from £1.2bn in December, the figure is still far below the average for 2011.

Exports of goods to non-EU countries rose to £12.9bn, from £12bn in December and to the highest level since records began in 1998, as the US, Russia and China bought higher levels of cars from the UK.

The Chancellor (left) is relying on a shift in the economy towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching package of spending cuts. Mr Osborne will unveil his Budget on March 21.

Other figures showed the trade deficit on goods only widening to £7.5bn in January, from £7.2bn in December.

The volume of exports was 2.2% higher, while the volume of imports was 1.8% higher.

As well as cars to non-EU countries, the rise in exports was also driven by an increase in oil shipped to EU countries including the Netherlands and Germany.

Nissan, in Sunderland, is the biggest of the car manufacturers based in the UK, with Mini, in Oxford and Birmingham, and Land Rover in Solihull and Halewood, following shortly behind.

But the UK also imported higher levels of oil, from countries including Nigeria, Saudi Arabia and Russia.

However, the figures did show a 0.8% dip in exports to the European Union, as the ongoing eurozone debt crisis continued to weigh on the UK's biggest export market.

Meanwhile, the trade data showed continued pressure on inflation, as import prices rose by 0.9% month-on-month in January as they were pushed up by higher oil prices.

The impact of higher oil prices will raise concerns that consumer price inflation will not fall back as quickly or as far as had been hoped for, which would keep up the squeeze on consumers' spending power.