Trade gap widens despite blip

DIANE COYLE

Economics Correspondent

Britain's trade deficit with countries outside the European Union fell last month to its lowest level since April. But the shortfall for the third quarter of the year was the worst for two and a half years.

The surprise improvement in the trade position in the latest month was the result of a surge in exports. A revival of growth in the US and the return of North Sea fields to normal operations after summer maintenance accounted for most of a 10 per cent surge in the value of exports.

Some City economists were cheered by the improvement. David Hillier, UK economist at NatWest Markets, said: ''The trade figures had been adversely affected by the slowdown in the US economy and summer maintenance work in the North Sea but both factors now seem to be unwinding.''

Adam Cole at the broker James Capel was gloomier about the one-month fall in the trade gap. ''The decline does not change the picture of an underlying deterioration in the UK trade position,'' he said. The Central Statistical Office said the trend showed the deficit continuing to widen.

The headline deficit in trade in goods declined to pounds 696m in September from pounds 980m in August. About a quarter of the improvement was due to higher oil exports, up 15.6 per cent, and lower oil imports, down 6.7 per cent. Britain's oil deficit fell to pounds 17m from pounds 81m the previous month as a result.

The underlying trade balance, excluding oil and erratic items such as aircraft and precious stones, also improved. It fell to pounds 582m from pounds 744m in August.

A recovery in North American trade played an important role. The US economic slowdown had a noticeable impact on British exports, but they bounced back by 20 per cent last month. Britain's trade gap with North America narrowed from pounds 413m to pounds 174m as a result.

However, the trade figures for the whole of the third quarter presented a less cheerful prospect. The July-September deficit of pounds 2.5bn was the highest since the first quarter of 1993.

The underlying deficit was the highest since 1988. Export volumes excluding oil and erratics grew by 4.3 per cent during the quarter, compared with a 5.8 per cent rise in import volumes. Trade with North America was in the red by pounds 877m, up from pounds 655m in the second quarter.

The figures had little impact on the pound. It lost more than a pfennig against the mark, closing at DM2.2045, but this was a side-effect of the European currency turmoil. Market attention in Britain is focused on Monday's figures for the preliminary estimate of gross domestic product in the third quarter, which could be crucial for interest rate policy.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all