🤑 It doesn’t get more affordable. Grab this 60% OFF Black Friday offer before it disappears…CLAIM SALE

UPDATE 1-UK trade deficit widens in March after imports jump

Published 05/13/2010, 04:53 AM
Updated 05/13/2010, 05:04 AM

* UK March global goods trade gap widens unexpectedly

* Imports rise five times faster than exports

* Sterling falls to day's low versus dollar after data (Adds detail, economist reaction)

By Christina Fincher and David Milliken

LONDON, May 13 (Reuters) - Britain's goods trade deficit with the rest of the world widened more than expected in March after imports grew more than five times faster than exports, official data showed on Thursday.

The Office for National Statistics said the data's volatility had been heightened by weather-related distortions at the start of the year, which shifted some exports into February, when the trade gap narrowed to a 3-1/2-year low.

The global goods trade gap widened to 7.522 billion pounds ($11.19 billion) in March from February's 6.305 billion pounds, after exports edged up by 1.0 percent but imports surged 5.2 percent, their fastest rate since September 2009.

The figures are unlikely to please Bank of England Governor Mervyn King, who said on Wednesday that Britain's economy needed to refocus on exports and move away from growth based on domestic consumption.

Sterling fell to the day's low against the dollar as investors questioned how big a boost past falls in the currency were giving to exporters.

"These are disappointing numbers," said Ross Walker, UK economist at RBS. "I'm sceptical we're going to see any significant contribution to growth this year from net trade. The much-needed rebalancing is not happening as quickly as we would have hoped, especially given the weakness in sterling."

The pound has shed almost a fifth of its value since the middle of 2007 against the currencies of its main trading partners <=GBP>.

The rise in imports was broad-based and driven by a jump in imports of intermediate goods such as mechanical and electrical engineering components as well as cars, chemicals and oil.

Exports of chemicals -- previously a strong performer -- fell sharply on the month.

"Recent events in the euro-zone -- the UK's biggest trading partner -- clearly cast a shadow over the longer-term prospects for UK exporters," said Vicky Redwood, economist at Capital Economics. "Overall, it still seems unwise to rely on the external sector to keep the economic recovery going once the fiscal squeeze hits."

Britain's goods trade gap with countries outside the European Union also widened more than expected in March to 4.103 billion pounds from 3.406 billion in February.

The total trade gap -- which includes the harder-to-quantify trade in services -- widened to 3.863 billion pounds from 2.187 billion pounds.

Britain's surplus in services fell to its lowest since July 2009 at 3.839 billion pounds in March, down from 4.118 billion.

Economists had forecast a global goods trade deficit of 6.41 billion pounds and a goods trade gap with non-EU countries of 3.35 billion pounds. (Editing by Mike Peacock)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.