Britain's export boom is showing signs of slowing down. The trade deficit with countries outside the European Union increased to £343m in February, as the value of imports rose more than the value of exports.
The gap, excluding erratic items such as ships, aircraft and precious stones, widened from £122m to £406m, mainly because of a big jump in imports. Exports were nearly flat between January and February.
The price of imported goods has been increasing rapidly - up 5.1 per cent in the latest three months compared with the previous three. The fall in the value of the pound this year will give more impetus to further rises in import prices. John Marsland, UK economist at UBS, said: ``Sterling's weakness will widen the trade gap.''
Underlying import volumes, excluding the erratic items, picked up last month, in contrast to exports. In the latest three months the volume of imports has risen 0.1 per cent while export volumes have fallen 0.8 per cent.
Imports of basic materials and of semi-manufactures such as pulp, chemicals and precious stones rose in the three months to February. Confirming other evidence of weak consumer spending, the volume of imports of consumer goods and cars fell. Car imports are down 20 per cent in the latest three months and 46 per cent lower than a year ago.
Export volumes were down in all categories except fuels. Exports of manufactured goods were 1.4 per cent lower in the latest three months. The biggest fall was in car sales, down 10 per cent although still 17 per cent higher than a year ago.
Recent months' figures have been distorted by sizeable imports of works of art in December, partly reversed when they were exported after auction in January. The Central Statistical Office said the underlying trend in non-EU trade was flat, after a big ``erratic'' deficit of £929m in December.
Adam Cole, an economist at James Capel, said: ``It would be unwise to completely write off the massive deterioration in December as a freak. The good news on trade is probably behind us.''
Others were not as gloomy. Jonathan Loynes at HSBC Markets said improving oil exports would help to cut the trade deficit in the next few months. Oil exports have already climbed for three months in a row. David Owen at Kleinwort Benson said: ``Export growth might slow, but the weak economy will cap import demand.''