UK trade gap balloons

The UK trade deficit with the rest of the world hit a record £13.7bn (€20.4bn) in the first three months of the year, official figures showed today.

Falling exports of oil and aircraft, at a time when imports were rising, meant the gap in trade widened from £12.6bn (€18.7bn) in the final quarter of 2003.

The British Office for National Statistics said its findings suggested the UK trade deficit was widening.

This was despite no change in the gap on trade in goods in March, which was estimated at £4.1bn (€6.1bn).

Economists said the monthly figure was slightly better than expected but a cause for concern lay in flat trade with EU countries.

In contrast, trade with countries outside the EU was lively in March, with exports ahead by 3.5% and the level of incoming goods rising 2.5%.

Overall, the UK deficit in goods and services was £2.9bn (€4.3bn) in March, lower than the previous month and significantly down on the £4.5bn (€6.7bn) in January.

Investec economist David Page said the record trade gap between January and March had come as “a bit of a shock” against forecasts made six months ago.

Exporters were struggling to lift sales to the EU as countries such as France and Germany battled for momentum in their economies after a prolonged slowdown.

“The lack of significant growth in the eurozone to help our exports and the strength of UK household and consumer expenditure driving import growth does leave a ballooning deficit,” Mr Page said.