U.K. Trade Gap Widens


The U.K.'s global goods trade deficit in January widened unexpectedly to its largest level since August 2008 due to a sharp drop in exports, data from the Office for National Statistics showed.

The global goods deficit grew to £8 billion ($12.05 billion) in January from a revised £7.0 billion in December, despite the weaker pound and signs of an economic recovery in key overseas markets. December's deficit was reduced from £7.3 billion.

The trade figures showed exports fell 6.9% to £19.5 billion in January, the sharpest monthly drop since July 2006. Imports decreased 1.6% to £27.4 billion.

The ONS said there was no "hard evidence" that severe snowfalls in January hit exports. Other economic data for the month, such as retail sales, were affected by what proved to be the worst winter weather for three decades.

Bank of England governor Mervyn King has said he expects a pickup in net trade to come through in due course, but he has said it would be a big help to the U.K. economy if the euro zone were to grow more rapidly.

The deficit in trade in goods with non-European Union countries widened more than expected to £4.8 billion in January from a revised £3.4 billion in December. That marks the widest non-EU trade deficit for a year and is below economist expectations of a £3.3 billion non-EU goods deficit.

Notably, the U.K.'s goods trade surplus with the U.S. shrank to £730 million in January from £1.1 billion the previous month, while the deficit with Switzerland widened to a record £556 million from £40 million in December due to a surge in imports of platinum, the ONS said.

The trade deficit in goods and services widened to £3.8 billion in January from £2.6 billion in December, also marking the largest overall deficit since August 2008. The surplus in services trade also shrank to £4.2 billion from £4.4 billion in December.

 


TradingEconomics.com, WSJ
3/9/2010 9:33:26 AM