Further evidence of the damage done to British industry by the world economic crisis came with the news that imports from the outside the EU to the UK surged in September, prompting fears that hard-pressed Asian economies are dumping cheap goods on the UK market.
The Office for National Statistics said exports to South-east Asia last month were 30 per cent below their average monthly value in 1997, while exports to Russia were about 50 per cent lower than average.
Dharshini David at HSBC Securities said: "The crises in overseas markets are clearly damaging the trade position." Neil Parker at Royal Bank of Scotland said: "The widening in the non-EU deficit indicates that international problems are feeding through into the UK."
Official figures also show a jump in the value of imports from non-EU countries into the UK from pounds 6.9bn to pounds 7.3bn. This, combined with evidence of falling import prices, prompted speculation that crisis-hit economies in the emerging markets had been "dumping" cheap goods on the UK market.
"A surge in non-EU imports is perhaps the first sign of `dumping' by stricken Asian economies," said ABN Amro.
Ms David said the import figures indicated that "solid domestic demand and attractive prices have prompted a surge of goods from abroad."
UK exports of goods to non-EU countries fell from pounds 5.7bn in August to pounds 5.4bn in September. Less oil and erratics, UK export volumes outside the EU were last month at their lowest since December 1996.
The pound fell half a cent on the dollar as dealers speculated that the worse-than-expected non-EU trade deficit would make an interest-rate cut more likely at next week's meeting of the Bank of England's Monetary Policy Committee. One said: "The slowdown will require the Bank to put in a series of interest-rate cuts."
August trade figures from the ONS were better than the City expected. The UK's overall deficit in traded goods narrowed pounds 143m to pounds 1.25bn, against market forecasts of pounds 1.5bn. The global surplus on traded services fell pounds 100m to pounds 1.047bn.
Analysts said the brighter August picture was partly due to a pounds 225m rise in the value of UK goods exported within the EU. The EU August deficit in traded goods was just pounds 68m, compared to an average over the last six months of pounds 400m.
However, most analysts remain gloomy about UK trade prospects. Today's quarterly Confederation of British Industry (CBI) survey is likely to report further falls in exporters' confidence. David Hillier at Barclays Capital said: "Surveys of manufacturing have suggested the sector is on its knees largely because of weak export demand. Today's non-EU figures support that view. The EU numbers will eventually catch up."