UK trade deficit widens to £34.8bn - the highest figure since 2010

In December the deficit grew more sharply than forecast to £2.9 billion

Exports of goods fell by £14.6 billion from the previous year (Getty)

The UK’s annual trade deficit reached its highest level in four years last year, according to figures released by the Office for National Statistics.

The total trade deficit widened to £34.8 billion in 2014, up from £33.7 billion in 2013 – and the figure was the largest since 2010 when the deficit stood at £37.1 billion.

Both exports and imports fell, but the former decreased two-fold compared to the latter. Exports of goods fell by £14.6 billion from the previous year, while imports of good decreased for the first time since 2009, falling by £7.3 billion.

In December the deficit grew more sharply than forecast to £2.9 billion - the highest since July - from £1.8 billion in November, as sliding oil prices saw volume imports of the commodity reach their highest level in more than six years.

The month saw a widening deficit in goods trade to £10.2 billion, while a surplus in the services sector narrowed to £7.3 billion.

For the year, the goods deficit continued to widen, reaching £119.9 billion. It is now more than five times higher than when comparable records began in 1998 and the figure stood at £22.2 billion.

The figures are likely to cause concern amid efforts to rebalance the economy away from its dependence on domestic demand, with total goods exports falling by £14.6 billion from the previous year to £292 billion.

It was the first time they had dropped below £300 billion since 2010.

However on a quarterly basis the goods shortfall narrowed from £31.6 billion in the third quarter of last year to £29.4 billion in the last three months, as exports rose £2 billion with manufactured products seeing a boost.

Trade with countries outside the EU was the main contributor to the quarterly goods deficit narrowing, the ONS said. The overall trade deficit also fell, from £8.7 billion in the third quarter to £7.1 billion in the fourth quarter.

Paul Hollingsworth of consultancy Capital Economics said: "While December's trade data make for disappointing reading, the surge in oil imports masks a more encouraging underlying picture."

David Kern, chief economist at the British Chambers of Commerce, said: "After a welcome pick up in the past two months, it is disappointing that our trade position weakened in December.

"We are clearly not making adequate progress in rebalancing our economy, and the weakening of the eurozone is creating problems for our exporters."

Additional reporting by Press Association