Belfast Telegraph

UK trade gap narrows but deficit with EU widens, ONS figures show

Britain's trade gap narrowed in February, according to official data, but its trade deficit with the EU widened to a fresh record ahead of the summer referendum.

The Office for National Statistics (ONS) said the UK's trade deficit with the EU hit £8.6 billion in the month, and £23.8 billion in the three months to January.

Both of these figures are the highest since the ONS began collecting this data in 1998, and beat the previous record EU monthly and quarterly deficits set in January of £8.1 billion and £23 billion respectively.

However, the overall deficit in goods with the world narrowed to £12 billion - down from £12.2 billion the previous month.

The ONS EU data will be argued over in the Brexit debate by Remain campaigners who say the UK's trade with the EU is vital, and Leave campaigners who say Britain should focus on new fast-growing markets.

The EU accounts for around 50% of the UK's exports, with Britain's referendum on EU membership set for June 23.

In February, imports from the EU jumped 6.7% to a record £19.9 billion, primarily lifted by goods from France, Germany and the Netherlands.

Over the same period UK exports to the EU lifted by 4% to £11.3 billion, largely accounted for by goods shipped to Germany and Sweden.

The overall deficit in goods with the world in February narrowed due to an increase in chemical and pharmaceutical products, primarily taken by the US and Germany.

However, the data comes as separate ONS figures revealed that the UK's industrial output fell 0.3% in February from the previous month, the biggest decline since August 2013.

The UK has been one of the fastest-growing advanced economies in the world for the last couple of years, but this growth is based around retail spending, and economists have long argued for greater manufacturing and exports to better balance the economy.

Howard Archer, chief European economist at IHS Global, said: "The weak February industrial production and trade data will reinforce concern about unbalanced UK economic activity, with growth highly dependent on consumers and the services sector.

"It reinforces our belief that gross domestic product growth will have been no better than 0.4% quarter-on-quarter in the first quarter, down from 0.6% quarter-on-quarter in the fourth quarter of 2015."

A spokesman for the Department for Business, Innovation & Skills said: "This Government wants to make Britain the best place in Europe to do business with and increasing exports remains a key priority. We have taken a number of steps to boost exports as we work towards having 100,000 more UK companies exporting by 2020."

The Government added that it has taken a number of measures to boost trade, including launching an export taskforce.

The spokesman said: "We will continue to build stronger trading links with emerging markets, push for international free-trade agreements and work to increase competitiveness at a European level."