Belfast Telegraph

UK goods trade deficit jumps to record high

Imports of oil and aircraft pushed Britain's goods trade deficit to a record high in November, official figures have shown.

The trade in goods deficit - the difference between goods exported and imported - widened to £8.7bn in November, from £8.6bn in October, the Office for National Statistics said.

The overall trade deficit, which includes services as well as goods, widened from £4bn to £4.1bn.

Total goods imported rose by 3.4% to £32.4bn in the month, while goods exported rose by 4.1% to £23.6bn, the ONS said.

Economists said a widening trade deficit was a blow to hopes that net trade - when exports outstrip imports - could make a positive contribution to economic growth in the fourth quarter of the year.

After slashing public sector spending, the Government has pinned its hopes for economic recovery on the private sector, and net trade will be key to growth. Latest survey evidence has provided confidence for exports going forward.

The export orders balance of the CBI's industrial trends survey jumped to a 15-year high in December, while the export orders index for the manufacturing purchasing managers' survey was at the second highest level in its 15-year history. The escalating eurozone debt crisis - with nations including Ireland, Spain, Portugal and Italy all falling victim - has cast a shadow over export trade in the months ahead.

But Vicky Redwood, senior economist at Capital Economics, said the troubles in parts of the eurozone seem to have had little adverse effect on the UK so far.

She said: "November's UK trade figures are not as bad as the widening in the headline deficits suggests. However, it is clear that net trade is giving at best a limited boost to the wider economic recovery.

"The big picture is that the external sector needs to start playing a much bigger role in the recovery if the economy is to weather the fiscal squeeze now under way."

She said excluding oil and erratics, such as aircraft, the trade in goods balance narrowed from £8bn to £7.4bn.

Import prices for traded goods were unchanged at 1.7% in November, figures which are likely to soothe the Bank of England's concerns over inflation.