UK exports plunge by £1.4bn
UK exports took their biggest plunge in more than three years during January, official figures showed today.
Exports fell by £1.4 billion, or 6.9%, to £19.5 billion compared with December in the largest month-on-month fall since July 2006, according to the Office for National Statistics (ONS).
While the ONS has no hard data yet on the impact of the winter weather on exports, it is likely that snow-bound manufacturers struggled to get their goods to ports.
JP Morgan economist Malcolm Barr said: "It is plausible that the snow disruption was more of a constraint on the ability to get UK exports to airports and the dockside than it was on receiving imports."
Exports to the US were the biggest casualty over the month, with a £500 million slide.
The overall decline far outstripped a 1.6% decline in imports - leaving the UK's goods trade gap with the rest of the world widening from £7 billion to £8 billion in January.
This is the biggest trade gap since August 2008 and undermines hopes that a weaker pound will boost exports and help rebalance the economy.
The pound came under further pressure today, falling below 1.50 US dollars as ratings agency Fitch also reiterated its concerns over the UK's public finances and called for tougher action on the deficit at a London conference.
Experts warned the poor trade figures would continue to act as a drag on recovery during the first quarter of 2010, having knocked off 0.2 percentage points from the UK's 0.3% growth in the final three months of 2009.
Vicky Redwood of Capital Economics said: "There is clearly a big question mark over whether any improvement in net trade will come through quickly or strongly enough to offset the weakness in domestic demand."
The British Chambers of Commerce also warned that the Government needed to do more to support trade after a survey of 250 exporting businesses which found that one in eight had experienced problems securing access to trade finance over the past year.
David Frost, director-general of the British Chambers of Commerce (BCC), said: "If the Government is serious about encouraging British exports as a driver of employment, economic growth and prosperity, it must resolve blockages in the finance that underpins UK global trade.
"Our exporters need to be able to compete more effectively with rivals on the continent and further afield, who are currently better supported during difficult economic environments or in riskier foreign markets.
Shadow Business Secretary Ken Clarke said: "Disappointing new statistics out today show that our goods trade deficit with the rest of the world actually rose in January from £7 billion to £8 billion and is now in its worst position since August 2008.
"This is a sign of the damage that 13 years of Labour government has done to our manufacturing sector.
"We need to build a new economic model based on saving, investment and exports instead of the debt-fuelled model of the last decade.
"Sir James Dyson has set out detailed proposals to the Conservative Party about how Britain can strengthen its manufacturing, design and technology sectors so we can take our products to the world.
"A David Cameron-led government will undoubtedly follow this broad agenda and this should give hope to the unemployed school leavers and graduates who have become the victims of Brown's recession, as they look to better career prospects in the future."
Liberal Democrat Treasury spokesman Vince Cable said: "These are deeply alarming figures which suggest that British exporters simply haven't been able to take advantage of the big devaluation which occurred in the last year.
"They suggest that the long term decline and neglect of British manufacturing has taken its toll and that an awful lot more needs to be done to rebalance the economy to make it more competitive.
"It is wrong to suggest that the British economy can escape from this recession by just relying on exports. It just isn't happening.
"Exports are one modest part of the national economy. We need an economy that is strong and secure across the board - and the Liberal Democrats are committed to delivering that."
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