Export surge cuts into non-EU trade deficit

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The Independent Online
A SURGE in exports helped to narrow Britain's trade deficit with countries outside the European Union to pounds 293m last month, the smallest for nearly six years.

Exports rose by pounds 426m between September and October, reaching a record pounds 5.3bn, according to the Central Statistical Office. Non-EU exports are now rising at a trend rate of 1.5 per cent a month, three times the rate for imports. Imports fell pounds 202m in the month to pounds 5.6bn.

The surge in exports mirrors the rise seen last week for August's trade within the EU. EU trade figures are released later because since the beginning of the year they have been compiled from VAT returns rather than customs declarations.

The narrowing in the deficit from pounds 921m in the previous month led the CSO to abandon its previous assessment that the trade gap had stopped shrinking. But officials warned that an abnormally good month following an abnormally bad one probably exaggerated the underlying improvement.

Excluding oil and erratic items - ships, aircraft, silver and precious stones - imports actually rose slightly on the month. This left a less dramatic narrowing in the non-erratic trade gap, from pounds 663m to pounds 330m. The rise in exports was flattered by exports of more than pounds 100m of jewellery and a sharp rise in car exports.

October's surge in exports came largely in manufactured goods, with Britain recording its first surplus in non-EU manufactured trade since records began in 1988. The surplus was pounds 170m, compared with a deficit of pounds 488m in September.

Separate figures showed that improvement in the trade figures contributed a third of the 0.6 per cent growth in national output between the second and third quarters.

The figures showed that investment rose by 1.3 per cent in the quarter. Consumer spending was up by 0.9 per cent to a level 2.4 per cent higher than a year earlier. The Chancellor may feel that tax increases in the Budget receive further justification now that consumer spending is rising at the economy's trend growth rate.