Slow progress on trade deficit shows sluggish return to growth

Overall deficit fell by just £200m in November

The UK's trade deficit improved marginally in November reinforcing the belief among most economists that the recession is over.

However, while a number of experts had predicted that the imbalance would remain flat in November, the improvement is only sluggish and will disappoint those that had hoped the recovery would be led by a spike in exports.

The Office for National Statistics (ONS) reported yesterday that the overall deficit in goods and services fell to £2.9bn in November, a £200m improvement on October's numbers. However, the improvement was largely the result of a fall in the volume of imports, rather than growth in exports.

In goods, the deficit shrank to £6.8bn in November, from an adjusted shortfall of £7bn the previous month, while the economy recorded a surplus of £3.9bn in the trade of services.

The figures cast doubt on the Bank of England's growth forecasts. The Bank has predicted that GDP growth could be as high as 4 per cent by the middle of the year, despite the economy still technically being in recession until the ONS publishes official fourth-quarter GDP figures at the end of this month. Economists largely agree that the economy is now growing. The UK stayed in recession in the third quarter of last year, with GDP falling by 0.2 per cent, despite most other developed countries emerging from the downturn.

"The improvement in the trade numbers in November is welcome, but it is probably due to a stabilisation in global demand. In the bigger picture, however, we are yet to see a rebalancing of the UK economy," said Colin Ellis, an economist at Daiwa Securities.

"While yesterday's figures affirm our view that we had positive growth in the fourth quarter, it is hard to see a strong recovery being led by exports. Even though the Bank's growth predictions would be lovely if they turned out to be true, we would not put money on it."

Indeed, while the month-on-month trade figures for November painted an improving picture, the deficit in goods in the three months to the end of November grew. The ONS said the shortfall increased by £1.6bn to £20.7bn, compared to £19.2bn in the three months to the end of August.

With consumer demand expected to be muted by the continuing growth in unemployment over the next few months and public sector spending likely to be restricted, it is hard to identify the catalyst for a strong recovery.

"We are still hopeful that exports will increasingly benefit from sterling's weakness and improving global growth and trade, and lead to net trade making a positive contribution to UK growth in 2010 – especially as we expect imports to be limited by only gradually improving domestic demand," said Howard Archer, chief UK and European economist at IHS Global Insight.

"Nevertheless, the process is still proving disappointingly slow."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Supporting role: at the Supreme Court, Rhodes was accompanied by a famous friend, the actor Benedict Cumberbatch
booksPianist James Rhodes on the extraordinary legal battle to stop the injunction of his memoirs
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
filmDheepan, film review
Sport
Steven Gerrard scores for Liverpool
sport
News
peopleComedian star of Ed Sullivan Show was mother to Ben Stiller
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
News
George Osborne became Chancellor in 2010
peopleChancellor accused of reneging on pre-election promise
Arts and Entertainment
The pair in their heyday in 1967
music
News
Lena Headey plays Cersei Lannister in Game of Thrones
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern