UK goods trade deficit highest in 15 months due to rise in global oil prices

Goods imports exports rose 1.5 per cent in December to £29bn while imports were up 3.8 per cent at £41.5bn, leaving the overall trade gap at £13.6bn, the highest since September 2016

The shutdown of the Forties pipeline in the North Sea also disrupted overall UK industrial production in the month (PA)

The UK’s trade in goods deficit jumped to its highest level in 15 months in December as rising global oil prices pushing up the prices of fuel imports, official data on Friday showed.

The Office for National Statistics separately reported that the shutdown of the Forties pipeline in the North Sea disrupted overall UK industrial production in the month, causing a 1.3 per cent decline.

The ONS said that manufacturing continued to expand in January, with output rising by 0.3 per cent, the eighth consecutive month of growth for the sector.

On trade, the ONS said goods imports exports rose 1.5 per cent in December to £29bn while imports were up 3.8 per cent at £41.5, leaving the overall balance at £13.6bn, the highest since September 2016.

UK exports had been supported to some extent by the slump in sterling in the wake of the June 2016 Brexit vote, but imports had also been strong, reducing the positive impact on overall GDP growth.

However, analysts warned the latest data was too heavily distorted by oil-related factors to get much of a steer on the latest performance of the UK economy.

“We would strongly caution about reading too much into these figures,” said Paul Hollingsworth of Capital Economics.

“Overall – nothing to rock the boat here,” said Alan Clarke of Scotiabank.

“The monthly industrial output data will become more valuable in one to two months’ time when they give us clues to the likely pace of Q1 GDP – that could sway the [Bank of England] closer [or] further from a May rate hike.”

The ONS estimates that UK GDP grew by 0.5 per cent in the final quarter of 2017, taking calendar year growth to 1.8 per cent.

The Bank of England on Thursday projected a similar rate of growth in 2018.

On a three-month basis, the ONS says UK goods imports were up 0.3 per cent and exports up 2.9 per cent, leaving the trade gap at £37.2bn.

And including the UK’s usual surplus in services, the overall trade deficit over the period was £10.8bn, up from £7bn in the previous three months.

The price of Brent crude rose around 7 per cent over December to $66.5 a barrel, according to Reuters data. It has since come down to $64.61.

The Forties pipeline has also reopened.

The ONS also released its estimate of construction output for December, showing 1.6 per cent growth in the month on the back of stronger house building and infrastructure output. But the year-on-year growth rate for the sector was still negative at –0.2 per cent.

The building sector is estimated to have been contracting since the second quarter of 2017.