U.K. Trade Deficit Widens

The U.K.'s trade deficit widened unexpectedly in October as the weaker pound failed to create a higher level of demand for export goods, data showed Wednesday.

The Office for National Statistics reported the U.K.'s global goods trade deficit widened to £7.1 billion ($11.57 billion) in October. That was the highest deficit since January and compares with a revised deficit of £6.9 billion in September. The ONS originally reported a September deficit of £7.2 billion.

The wider deficit came as a surprise as the weaker pound has, for some months now, been expected to bring about an increase in exports while imports would likely slow as they become more expensive for U.K. traders.

Total goods exports rose by £900 million in October to £20.4 billion, as imports rose £1.1 billion to £27.5 billion, the data show. Imports of chemicals rose to a record high of £3.7 billion, lifted by high levels of medicinal chemicals and also organic and nonorganic chemicals. Among exports, the data showed a pick-up in car exports, while imports of passenger autos rose at a slower pace.

The U.K.'s trade deficit with non-European Union countries narrowed to £3.5 billion in October from September's £3.8 billion deficit, the ONS said. Economists were expecting a deficit of £3.6 billion.

Data from the ONS also said trade in oil narrowed to a deficit of £100 million in October from £500 million in September as imports rose by less than £100 million, while exports rose by £400 million. Exports likely increased as maintenance works at some oil platforms came to an end in October, an ONS spokesperson said.

By country, the ONS said the U.K.'s surplus on trade with the U.S. narrowed to £700 million in October from £900 million in September. Although the absolute volume of exports remained higher than imports, exports rose at a slower pace.

The deficit on total global trade in goods and services widened to £3.2 billion in October from £3.1 billion in November. The goods trade was behind the deeper shortfall, as trade in services remained unchanged from September at a surplus of £3.9 billion.

U.K. Trade Deficit Widens

TradingEconomics.com, WSJ
12/9/2009 10:56:47 AM