David Cameron's hopes of promoting an export-led recovery were left deflated yesterday by official figures showing that the UK's trade deficit increased by more than expected in February.
The deficit in the trade of goods came in at £8.7bn over the month, up from £7.9bn in January, according to the Office for National Statistics. The deficit was well above the £7.7bn that economists had pencilled in. The overall deficit, which includes trade in services, rose to £3.5bn. January's overall deficit figure was also revised up by the ONS to £2.5bn from the previous £1.8bn.
The rising goods trade deficit was largely a result of a fall in exports to countries outside the EU – an area that ministers have earmarked for strong growth in the coming years. The month's fall was driven by slower car sales to non-EU nations, including China, Russia and the US.
The Prime Minister is heading a trade mission to Asia this week, in which he hopes to promote British business in the fast-growing region. Mr Cameron will travel to Burma tomorrow, where he will call for sanctions on the pariah state to be lifted as a reward for the regime's recent tentative political reforms.
Despite the recession in the eurozone, exports to EU countries rose over the month, by £300m, to hit £13.1bn. Imports from the region fell by £200m. Yet some analysts doubted that this would last. Vicky Redwood at Capital Economics said: "With sentiment towards the eurozone fading again, we think that export growth to Europe is likely to weaken soon too."
In his March Budget speech the Chancellor, George Osborne, said the UK's falling share of world exports was "the road to Britain's economic irrelevance".Reuse content