Britain's deficit at a new low

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The Independent Online

Economics Correspondent

Britain's trade deficit tumbled to its lowest level for eight years in the first quarter of 1995, thanks to strong export growth. The figures came as a surprise due to big increases in estimates of exports in January and February.

This is likely to lead to an upward revision to GDP for the first quarter of this year, weighing against the Chancellor's case for leaving base rates unchanged. Jonathan Loynes, an economist at HSBC Markets, said: ''There are mixed blessings for Mr Clarke in these figures.''

Government statisticians found far more exports to Britain's European Union trading partners than they first thought, and slightly smaller imports. The visible trade deficit was pounds 520m in March, down from pounds 694m. For the first three months of the year, it is at just under pounds 2bn, down from pounds 3bn in the final quarter of last year.

The underlying trade gap, excluding oil and erratic items, was virtually unchanged at pounds 1.3bn in March. The improvement in the headline figure was due mainly to higher exports of oil and precious stones, along with smaller imports of aircraft. Oil exports are at their highest for seven years, and produced a surplus of pounds 746m in March. The Central Statistical Office cautioned that imports of ships will hit the April trade figures.

The revisions to exports have brought them back into line with industry surveys showing extremely buoyant export orders. In January to March, underlying export volumes climbed 11.5 per cent, compared to an increase of only 2.0 per cent in import volumes.