UK Trade Deficit Rises

The UK trade deficit rose in November as exports of goods fell sharply, in a sign of the threat posed by collapsing global demand to the British economy., Bloomberg 1/13/2009 5:41:58 AM

Both imports and exports fell as domestic and international demand weakened amid a global recession that is hitting most of Britain’s main trading partners.

The trade deficit in goods and services reached a seasonally adjusted £4.5bn, up from £3.9bn in October.

The goods trade deficit hit £8.3bn up from a downwardly revised £7.6bn in October, the highest level since records began in 1697.

In November, total exports of goods fell by 5.8 per cent, amid a sharp drop in exports to countries outside the EU, while total imports fell by 1.8 per cent.

The fall in exports comes after a sharp depreciation in the value of the pound throughout much of last year, which would be expected to help sales of British goods abroad. However, sterling’s decline was particularly sharp towards the end of 2008, and it tends to take some time for falls in currencies to feed through into higher exports - suggesting that the full impact of the weaker pound may not yet have been felt.

The widening trade deficit comes as Peter Mandelson, the business secretary, prepares to announce a package of measures to help ease the plight of manufacturers.

The £10bn loan guarantee scheme for small to medium sized businesses will be modelled on the existing small firm loans guarantee scheme, with the government guaranteeing 75 per cent of the capital in return for an annual fee paid by the borrower. according to government insiders.

Lord Mandelson is also expected to announce measures worth more than £1bn to support export credit.

The latest trade figures showed that over the three months to November, the deficit narrowed by nearly 4 per cent, but both imports and exports of goods have fallen by 4.5 per cent.

The UK’s surplus in services remained fairly flat in November, at £3.9bn compared to £3.8bn the month before.

UK Trade Deficit Rises