Trade gap widens as exports to EU fall

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The Independent Online
A disappointing surge in the trade deficit has added to the evidence that the UK economy is suspended between consumer recovery and industrial slowdown.

Imports have picked up since the new year while growth of exports - especially to the EU - has slowed.

Separate figures yesterday showed that consumer credit continued on its upward trend in February.

However, Nationwide building society said house prices remained flat at an average of pounds 51,519 in March.

This was 0.2 per cent lower than a year earlier, after advancing 0.9 per cent in the year to February.

Nationwide said that it still believed a housing market recovery was under way.

The gap between imports and exports widened to pounds 1.4bn in January, compared with a deficit of pounds 557m in December. A quarter of the change was due to trade in oil and erratic items such as aircraft and precious stones.

The rest of the deterioration was explained by trade with other EU countries.

The value of exports to the EU fell 1.5 per cent during the month while imports jumped by 5.3 per cent.

This turned a surplus of pounds 56m in December into a January deficit of pounds 463m.

However, Britain's deficit in trade with countries outside the EU also worsened in both January and February, when it reached pounds 1bn compared with pounds 613m in December. The trade picture is slightly less bleak taking the three months to January together, when the total deficit was pounds 2.6bn compared with pounds 4.1bn in the previous three months.

Car exports were up 25 per cent during the period.

The Central Statistical Office said the trend for the global trade deficit was narrowing. Underlying export volumes were down 0.5 per cent in the three months to January. But import volumes fell 1.5 per cent during the same period, with non-EU countries markedly gaining ground over our European partners.Across the Atlantic, the US trade deifict rose to $10.27bn in January, a near-50 per cent increase to the highest level for six months.

Imports rose 2.4 per cent during the month to a record $76.9bn, while exports fell 2.2 per cent to $66.6bn.

Exports of civilian aircraft and telecommunications equipment were particularly weak. Most categories of imports increased.