UK goods trade deficit unexpectedly widens

Britain's goods trade deficit with the rest of the world unexpectedly widened in January to its biggest since August 2008, raising further concerns about the strength of the country's broader economic recovery.

The Office for National Statistics said on Tuesday that after the sharpest drop in exports in over three years, Britain's goods trade gap widened to 7.987 billion pounds ($11.97 billion) from 7.010 billion in December, and well above the 7 billion forecast by economists.

The figures are likely to further raise policymakers' concern that the sharp fall in sterling (=GBP) (EURGBP=) (GBP=) over the past two years has not led to the expected boost in exports - a point reiterated by Bank of England policymaker Kate Barker on Monday.

"It's a pretty disappointing number," said Alan Clarke, economist at BNP Paribas. "Trade is one area where people have been expecting an improvement but it doesn't seem to be happening. This is bad news for first quarter gross domestic product."

Gilt futures and sterling were little moved after the data.

The deterioration in the global trade balance was a result of a 6.9 percent fall in exports, the biggest fall since July 2006. Imports were down just 1.6 percent.

The goods trade gap with non-EU countries also widened unexpectedly to 4.834 billion pounds from 3.428 billion, the biggest deficit since January 2009.

Exports to non-EU countries suffered their sharpest fall since January 2009, dropping by 12.5 percent on the month, while imports rose by 1.6 percent.

January was an unusually icy month in Britain, which may have disrupted the transport of goods for export to ports, though the ONS said that Tuesday's data in itself did not provide firm evidence of that.

The ONS said there was a broadbased fall in exports, with chemicals exports losing their recent strength. Car imports fell by 215 million pounds, the biggest drop since November 2008, after rising for most of the previous six months due to a government scrappage incentive for old cars.

The weak trade figures contrast with business surveys, which in recent months have shown a strong increase in export orders, giving hope that an improvement in the trade balance may yet appear.

Policymakers have identified net exports as an important driver for future UK growth, as consumer and government spending are expected to remain muted due to high debt levels in both the household and public sector.

"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," said Vicky Redwood, economist at Capital Economics.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
  • Get to the point
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

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power