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Export growth aids deficit

The trade deficit in the UK shrank in March as exports to the US, China and Russia grew strongly, official figures have shown

The UK's trade deficit on goods and services was £2.7bn in March, compared to £2.9bn in February, while the deficit on goods alone was flat at £8.6bn.

Exports to countries outside the EU grew by 12%, driven by chemicals and cars, while the eurozone crisis continued to take its toll as EU exports were flat month on month.

While the deficit shrank slightly, economists said that net trade was still likely to have knocked 0.2% off gross domestic product (GDP) growth, putting a dampener on hopes that growth figures for the first quarter of the year will be revised upwards.

Vicky Redwood, Chief UK Economist at Capital Economics, said: "March's UK trade figures showed a bit of an improvement, although the external sector still looks likely to have dragged on GDP growth in the first quarter overall."

The UK economy shrank 0.2% in the first quarter of the year, entering a technical recession.

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