UK trade deficit jumps to £3.9bn

 

The trade deficit shot up in September, according to the Office for National Statistics, dealing a blow to the Government's hopes of presiding over an export-driven recovery.

Click HERE to view graphic

The UK's deficit in goods and services in September was £3.9bn, up from £2.7bn in August. The volume of goods exports fell by 1.6 per cent and the volume of imports rose by 1.6 per cent. The deficit on the trade in goods reached £9.8bn, the highest figure on record. The UK's long-standing surplus on trade in services remained static at £5.9bn. Exports to our major EU trading partners fell in value by £600m in the month, while imports from the Continent rose by £1.6bn.

Analysts interpreted the figures as an economic distress signal. Nida Ali, an economic adviser to the Ernst and Young Item Club said: "These figures are every bit as bad as we feared they might be. With exports to EU countries down by about 3 per cent, adverse developments in the eurozone are clearly taking their toll on export growth. Given the numerous headwinds, the trade position is unlikely to recover in the months ahead".

Chris Williamson, of the financial data firm Markit, said: "Further export losses look likely in coming months, with survey data suggesting the rate of decline could accelerate substantially. With domestic demand hit by deficit-fighting austerity measures and export sales falling, it is hard to see what will drive economic growth in coming months, raising the risk of a double-dip recession."

Rachel Reeves, the Labour Party's shadow Chief Secretary to the Treasury, argued that yesterday's disappointing figures were primarily a consequence of domestic economic weakness, rather than an external shock from the eurozone sovereign debt crisis. She said: "Exports to the eurozone in the last quarter are 17 per cent higher than the same period a year ago. Our economy has now flatlined for a year because domestic demand has fallen and confidence has slumped as spending cuts and tax rises that go too far and too fast have kicked in".

There was further bad news for the Chancellor in the ONS figures, with the estimate of the trade deficit for August revised up from £1.8bn. This turned an apparent narrowing of the trade deficit into a widening. This change also raises the possibility that the GDP figures for the third quarter of 2011, which the ONS said last week showed an 0.5 per cent expansion, might be revised down.

However, economic analysts cautioned against reading to much into a single month's figures. Howard Archer of IHS Global Insight said: "It should be borne in mind that trade data is notoriously volatile and can be revised substantially so a single month's figures need to be treated with caution. The jump in UK imports in September looks particularly strange given the apparent softness of domestic demand."

The UK's weak trade figures made for a contrast with the latest numbers from Germany. Figures released yesterday showed that record exports pushed the German trade surplus to a three-year high in September.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
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

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific