Import surge pushes trade deficit to peak

BRITAIN recorded its largest underlying visible trade deficit so far this year in May, as the volume of exports fell more sharply since April than the volume of imports.

The visible trade deficit widened from pounds 770m in April to pounds 1.032bn in May, according to the Central Statistical Office. But much of the deterioration was explained by a sharp rise in imports of precious stones. Excluding these, other erratic items and oil, the deficit widened to a five- month high of pounds 1.498bn.

The figures were in line with forecasts, but City analysts warned that the trend was likely to worsen in coming months as company investment and buoyant consumer spending sucked in imports, while a slowdown in US economic recovery hit demand for exports.

The CSO also revised the trade figures for 1992 and 1993. It raised its estimate of exports in 1992 by pounds 296m and cut its import estimate by pounds 6m, leaving a revised visible estimate of pounds 13.1bn. Exports in 1993 were raised by pounds 575m and imports by pounds 104m, giving a visible deficit for last year of pounds 13.2bn. The revisions affected estimates of trade volumes more than prices.

Exports are now rising at a trend rate of 1 per cent a month, while imports rise by 0.5 per cent a month. The headline visible trade deficit has therefore been falling steadily on a trend basis since the beginning of the year.

Trade is growing more rapidly with other countries in the European Union than elsewhere. In the three months to May exports to the rest of the EU rose by 6 per cent, but were flat with the rest of the world. Imports from the EU rose by 4.5 per cent, while imports from the rest of the world fell slightly.