Exports dive 6% as US markets dry up

Press Association
Tuesday 13 January 2009 15:27

A collapse in exports sent the UK's trade deficit in goods to a record £8.3 billion in November, official figures showed today.

Total exports fell 6 per cent to £19.8 billion over the month, driven by a slump in exports to the US, according to the Office for National Statistics (ONS).

The grim figures come despite sterling's recent weakness against the dollar with a fall of more than 20 per cent since the end of September.

The fall in exports far outstripped a 2 per cent decline in imports, the ONS figures showed.

Although exports to European Union countries were virtually unchanged, those to non-EU nations slumped 12.5 per cent as firms overseas retrenched in the wake of the autumn's financial meltdown and worsening economic prospects across the globe.

Exports to the US, the world's biggest economy, fell more than 21 per cent, while those to the second largest, Japan, slid 11 per cent over the month.

Paul Dales of Capital Economics said interest rates were set to fall to "virtually zero" as the pound's weakness failed to provide a meaningful lift to the economy.

"The pound is now about 30 per cent below its peak. But with global trade flows subdued, this is unlikely to make much difference, at least in the near-term.

"Overall, with the external sector so weak, policymakers will need to do much more to stimulate domestic activity."

The 2 per cent fall in imports in the figures meanwhile marked a fourth successive monthly decline "consistent with contracting domestic demand", IHS Global Insight's Howard Archer said.

The UK's trade deficit in goods and services also widened to £4.5 billion from £3.9 billion in November, the ONS added.

Shadow business secretary Alan Duncan said the trade figures gave "serious cause for alarm".

"Along with the collapsed pound, this deficit shows the reality of Britain's plight," said Mr Duncan.

"With firms unable to sell their products abroad, Gordon Brown's claims of a rapid recovery are exposed as hopelessly optimistic.

"The truth is that 10 years of economic mismanagement has left our economy completely unprepared to deal with the downturn, and a clear route out of the pain seems a long way off."

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