Although the latest headline figures for the deficit in trade in goods showed an improvement, thanks in large part to oil and erratic items, the shortfall in the first quarter of this year was the biggest for nearly eight years.
The gap between the value of goods exports and imports in January-March was pounds 3.2bn, up from pounds 2bn in the final quarter of last year. March's deficit of pounds 1.5bn was about pounds 600m better than February's, partly reflecting unusually high aircraft exports.
The deficit with non-EU countries alone dipped to pounds 715m in April from pounds 1bn the previous month, again partly because of erratic items; but had risen to pounds 3.4bn in the first quarter from just under pounds 3bn. Exports to the most troubled Asian economies once again fell in April, and are running well below last year's levels.
Underlying export volumes fell by 0.4 per cent in the first quarter, compared to a 0.9 per cent drop in import volumes. The Office for National Statistics said trends in both were broadly flat.
Most City analysts are now gloomy about Britain's trade prospects despite the recent dip in the pound.
Kevin Darlington, an economist at ABN-Amro, said the painful cuts exporters have made in profit margins had not been enough to preserve market share. Export prices have fallen just 7 per cent in two years while the pound has climbed by more than 25 per cent.
"Exporters are pricing themselves out of export markets and it comes as no surprise, therefore, to see a growing effect on trade volumes," he said.
Terry Cook, director of the North West Chambers of Commerce, said local manufacturers had cut their profit margins in a bid to keep market share.
"Those companies which have always competed on price are particularly vulnerable now. Those competing on quality have been able to continue that for some time, but their advantage is starting to be eroded too," he said.
Industrialists hope that the Bank of England's Monetary Policy Committee will once again vote against an increase in interest rates after its meeting next week. The pound has fallen more than 5 per cent in value from its peak in early April, but this welcome slide has come to a temporary halt.
Sterling ended nearly a pfennig higher at just under DM2.91 yesterday. Its index against a range of currencies was up 0.3 at 103.6.Reuse content