UK trade deficit hits record on rising gas and electricity imports

Britain ran a record deficit in gas and electricity as well as crude oil in November, according to the latest figures to highlight Britain's growing energy crisis.

The UK imported a record £504m of fuels other than oil, outstripping the £131m the country exports to leave a £373m shortfall - more than the deficit for all of 2004. The oil account posted its fifth successive deficit - another record.

The shortfalls contributed to a sharp rise of £1bn in the UK's global goods trade deficit to £6bn, which City analysts described as "hideous" and "grim".

The figures show Britain is becoming increasingly dependent on foreign energy sources as prices rise and the geopolitical situation looks ever more volatile.

The UK is on track to post its first annual oil deficit since 1980 when the impact of the discovery of North Sea oil kicked in. The first 11 months of last year show a deficit of £569m compared with a £1.7bn surplus at the same point in 2004.

Analysts said the end of the UK's era as an oil exporter would add to problems facing Gordon Brown this year in hitting his growth and public finances targets. Stephen Lewis, the chief economist at Monument Securities, said 2005 marked the year when oil exports "slumped". He said exports dropped to 52 million tonnes last year from 61 million in 2004 as imports surged to 54 million from 41 million. "It is hardly surprising Mr Brown is having a tough time maintaining the appearance of the UK as a miracle economy," he said. "An economic magician of the first order would be hard-pressed to battle the headwinds from the North Sea."

He said the UK financial markets, which are betting on high UK share prices and currency values, had "yet to absorb the grim implications of trade figures".

The reverse in the UK's position on energy has combined with a spike in prices, prompting businesses to warn they would have to mothball factories rather than run them at a loss.

Employers' groups such as the CBI and EEF have blamed rigged continental markets for keeping prices of gas coming to the UK high and urged the Government to take action. A spokesman for the EEF, which represents manufacturers, said: "These figures highlight how we are becoming increasingly dependent on overseas supplies to meet our energy needs. Sooner or later there will have to be questions asked about the wisdom of allowing a strategic asset fundamental to the operation of the economy to lie beyond our control."

City economists said the record trade deficit - which was driven by a general widening gap - would hinder the Government's aim of rebalancing the economy away from consumption and into exports. The Office for National Statistics added an extra £500m to October's deficit, meaning the trade position has worsened by £1.5bn in two months.

But there was a glimmer of hope from an 8 per cent annual growth in exports to the eurozone.