Britain's trade deficit fell by pounds 300m to pounds 1bn in September as the volume and value of exports reached a record high. But City analysts warned that the improvement in the trade balance would prove short-lived.
Although Ian Lang, President of the Board of Trade, welcomed the performance of exporters, official statisticians said the latest estimates of trends in both volume and value pointed to a continuing deterioration in the trade balance. "The October global data will probably show the improvement in the deficit more than reversed," warned Adam Cole, economist at James Capel.
The latest figures, incorporating new information about the balance of trade with the rest of the European Union, showed that rising imports from the rest of the world were responsible for the trend deterioration in the deficit.
Comparing the three months ending in September with the previous three, the underlying volume of exports - excluding oil and erratics - rose by just over 3 per cent to both the EU and the rest of the world. However, imports rose by 5 per cent from outside the EU but only 2.7 per cent from within the EU.
The trade deficit of pounds 300m with the EU in September was unchanged on August. However, it fell by pounds 500m in the third quarter compared with the second. It would have improved even more without a surge in imports of cars. This caused the deficit on cars to worsen by more than pounds 300m to pounds 1.2bn in the third quarter. The price of exports to the EU rose much more sharply than those to the rest of the world.