Britain's deficit in trade with countries outside the EU soared by pounds 2.4bn to pounds 7.5bn last year, despite a record surplus on trade in cars. Yesterday's figure suggested that the full trade deficit for 1995, due next week, is likely to be more than pounds 12bn, compared with pounds 10.7bn the previous year.
The biggest-ever deficit with North America, at more than pounds 1.8bn, lay behind the weaker non-EU trade performance. The gap between imports and exports turned pounds 2bn for the worse as the US economy slowed.
Imports of 'intermediate' goods such as microchips and electronic components surged, and there were also unusually high imports of silver in the second half of the year.
However, there was an pounds 800m surplus on trade in cars, the highest since the series began. Thanks to a 25 per cent jump in exports, this was twice the previous year's surplus.
The overall gap widened to pounds 613m in December, up from pounds 436m. Even so, the figure was better than expected and City economists suggested that the trend could be stabilising.
The volume of imports - excluding oil and erratic items - jumped 6 per cent in the month, compared with a 1.5 per cent rise in exports. But their growth has been similar over the past three months taken together.
"Underlying export volumes are back on a clearly upwards trend," said Kevin Darlington, an economist at the brokers Hoare Govett.
During 1995 as a whole there was a 6 per cent increase in export volumes, with imports up 5 per cent. There were particularly big advances in imports of food, beverages and tobacco - mainly meat and fruit and vegetables - and finished manufactures.
Imports of basic materials and semi-finished manufactures were higher year-on-year, but fell sharply during the last quarter of the year.
Michael Saunders, UK economist at Salomon Brothers, said this fitted with survey evidence that firms were cutting back stock levels, which had built up rapidly earlier in the year.
Import prices rose significantly more than export prices due to the surge in commodity prices earlier in the year and the pound's decline.
Import prices were 11 per cent higher than in 1994, compared with a 6 per cent increase in export prices.
Some analysts suggested that British exporters had taken advantage of the fall in the pound last year to build profit margins rather than sales. If so, exports could be hit by weaker growth overseas this year.Reuse content