UK export figures provide pre-Budget boost
Tuesday 13 March 2012
Chancellor George Osborne's plans to rebalance the economy received a pre-Budget boost today as figures showed the UK exported a record level of goods to countries outside the European Union such as the US and China in January.
And while the trade deficit on goods and services - the gap between exports and imports - widened to £1.8 billion in January from £1.2 billion in December, the figure is still far below the average for 2011.
Exports of goods to non-EU countries rose to £12.9 billion, from £12.4 billion in December and to the highest level since records began in 1998, as the US, Russia and China bought higher levels of cars from the UK.
The Chancellor is relying on a shift in the economy towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching package of spending cuts. Mr Osborne will unveil his Budget on March 21.
Chris Williamson, chief economist at financial services information firm Markit, said: "Resurgent economic growth in the US and emerging markets is helping keep the UK economy from sliding back into recession, but the outlook remains very uncertain."
Other figures showed the trade deficit on goods only widening to £7.5 billion in January, from £7.2 billion in December. The volume of exports was 2.2% higher, while the volume of imports was 1.8% higher.
As well as cars to non-EU countries, the rise in exports was also driven by an increase in oil shipped to EU countries including the Netherlands and Germany.
Nissan, in Sunderland, is the biggest of the car manufacturers based in the UK, with Mini, in Oxford and Birmingham, and Land Rover in Solihull and Halewood, shortly behind.
But the UK also imported higher levels of oil, from countries including Nigeria, Saudi Arabia and Russia.
However, the figures did show a 0.8% dip in exports to the EU, as the ongoing eurozone debt crisis continued to weigh on the UK's biggest export market.
Vicky Redwood, chief UK economist at Capital Economics, said: "Although the UK trade deficit widened in January, the big picture is that the external sector is still holding up quite well given the euro-zone debt crisis. But with the euro-zone economy sliding into recession, we doubt that this will last."
Meanwhile, the trade data showed continued pressure on inflation, as import prices rose by 0.9% month-on-month in January as they were pushed up by higher oil prices.
The impact of higher oil prices will raise concerns that consumer price inflation will not fall back as quickly or as far as had been hoped for, which would keep up the squeeze on consumers' spending power.
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