Trade deficit narrows

Britain's trade deficit narrowed by more than expected in January, official figures showed today, fuelling hopes the economy will bounceback from a dismal end to last year.

The gap between goods imported and exported narrowed to £7.1 billion in January from a record £9.7 billion in December, the Office for National Statistics (ONS) said. Economists had forecast a deficit of £8.5 billion.

The trade in goods shortfall was cut down by record exports of food, drink, tobacco and oil, boosting total exports by 5.4%, while imports fell by 4%. The overall trade deficit in January, which includes services, narrowed to £3 billion, compared to £5.5 billion the previous month.

Analysts said the figures lifted hopes that net trade will make a positive contribution to GDP growth in the first quarter of 2011, after it surprisingly declined by 0.6% in the final quarter of last year.

Prime Minister David Cameron said the trade figures were "exactly the sort of rebalancing our economy needs".