Pound fails to help exports as demand for UK goods collapses

Exports slump even more than imports to leave trade deficit yawning alarmingly

The much-vaunted boost to UK trade from the devalued pound has yet to materialise, according to the latest official figures. Despite a 25 per cent slide in the value of sterling since mid-2007, the UK's trade deficit widened by more than expected in January as exports to non-European Union countries fell sharply. The deficit in goods and services grew to £3.6bn, from a shortfall of £3.2bn in December. The deficit in goods, at £7.7bn, is up by £500m on the previous month.

The depressed trade figures echo similar performances in Germany and Japan, suggesting that the global decline in demand and trade – down about 10 per cent in recent months, according to the IMF – is dragging down every major trading nation.

The drift to protectionism evident in some advanced and emerging eco-nomies also promises to slow trade. The Chancellor, Alistair Darling, warned yesterday: "In our globalised econ-omy, a pound spent in Beijing or Bremen is a job saved in Bradford or Birmingham. This is what the G20 presidency is about."

Mr Darling called again for an increase in the IMF's funds to help poorer nations: "We can start to build that consensus by recognising that our common interest need not contradict a country's self-interest – in fact, it can complement it. And it's all part of rebuilding confidence."

Confidence in the UK's capacity to export will not be bolstered by the latest data, however. Exports of traded goods fell by 4 per cent in January, compared with December, the fourth successive decline. Traded goods exports were down by 9.3 per cent on a quarterly basis.

The EU provided a ready market for cheaper British goods: exports to EU countries rose by 5.9 per cent in January alone. But this was outweighed by a 15.9 per cent plunge in exports to non-EU countries. Exports to the US fell by 8.5 per cent, or £1bn, in January. The deficit with the EU narrowed markedly – to £2bn in January, down from £2.9bn in December. Meanwhile, imports of traded goods fell by 1 per cent on the month, marking a sixth successive decline and consistent with markedly contracting domestic demand.

Howard Archer, UK economist at Global Insight, said: "While sterling's sharp depreciation has yet to fully feed through to boost exports, it seems highly likely that they will continue to be held back over the coming months by contracting demand in key markets. February's survey evidence from both the CBI and the manufacturing purchasing managers [index] indicated sharply falling export orders."

However, other economists painted a more optimistic picture, a perverse result of the UK's relatively poor trading performance. Colin Ellis of Daiwa Securities explained: "If exports and imports both fell by the same proportion over the year as a whole – say 10 per cent – the trade deficit in the UK would shrink, providing some support to GDP. Yet if exactly the same thing happened in Germany or Japan, trade would detract significantly from GDP, because they were running surpluses prior to the downturn. That is a key reason why the decline in UK GDP this year may not be as large as in some other industrialised countries."

The ONS noted an especially disappointing UK export performance in capital goods, and that imports of consumer goods, apart from cars, had continued to rise.

The dangers to international trade were also highlighted by the US Treasury Secretary, Timothy Geithner, yesterday. Flanked by President Barack Obama and speaking before the meeting of G20 finance ministers to be hosted by Mr Darling at the weekend, Mr Geithner said: "Until just a few months ago, exports were actually one of the areas where we were still getting some lift in the economy. That has now gone away. It's now banished because purchasing power in many of these other countries, as well as credit in these other countries, has contracted. So we've got to spend some time thinking about how we're going to strengthen them." The US Congress recently insisted on "Buy American" clauses in President Obama's $787bn (£567bn) economic stimulus package. The President added that he is "optimistic about the pros-pects" for the G20 summit, which begins at 10 Downing Street on 2 April.

Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Esteban Cambiasso makes it 3-3
premier league
The Etihad Stadium, home of Manchester City
premier leaguePlus updates from Everton vs Palace
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Heskey's aim has improved since the end of his English football career

Long after his career in English football has ended, Emile Heskey's impotency in front of goal remains an object of ridicule.

Dame Vivienne Westwood has been raging pretty much all of her life
peopleFirst memoir extracts show she 'felt pressured' into going out with the Sex Pistols manager
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Lewis Hamilton in action during the Singapore Grand Prix
Formula OneNico Rosberg retires after 14 laps
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam