Trade gap hits UK hope of export-led recovery

The Bank of England's hopes of an export-led recovery were dealt a blow yesterday as the UK's goods trade gap with the rest of the world hit £8.6bn.

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The figures ended a run of relatively strong economic news since the turn of the year as the Bank's Monetary Policy Committee gathered for its first meeting of 2012.

The City was braced for poor numbers after a stellar October, but the UK's goods deficit was even bigger than the analysts feared at £8.3bn.

Exports tumbled 1.7 per cent as imports rose 1.1 per cent during November, unwinding most of the previous month's stunning performance.

The trade figures are notoriously volatile, but – surprisingly given the looming recession in the eurozone – the fall in exports was to non-European Union countries, down £400m.

Exports to EU nations rose slightly, but this was dwarfed as European imports rose by £400m to £17.2bn during the month.

Net trade is likely to make a small contribution to fourth-quarter growth, but experts were looking for a bigger trade boost.

IHS Global Insight's Howard Archer said: "There is little evidence overall of marked improvement."

Only an improved UK surplus on services – rising to £6.1bn on the month – kept the UK's overall £2.6bn trade deficit from widening further.

Lloyds Bank Corporate Markets analyst David Page said: "The UK's ambitions of export-driven rebalancing are likely to be thwarted in the short-term by the euro area's troubles."