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Record UK goods trade gap


Record UK goods trade gap


The UK’s goods trade deficit rose to a record high during November – a development that will raise further concerns about fourth-quarter economic growth in the UK.

The trade imbalance was mostly due to imports of oil and aircraft and analysts said that was probably a one off event.

The underlying deficit, which strips out such volatile items, narrowed from October’s record high.

The improvement was driven by a sharp rise in car exports, suggesting firms were starting to feel some benefit from the relative weakness of the pound.

Britain’s surplus in trade in services improved, but not by enough to offset the widening deficit in goods.

Sterling fell immediately after the data, but recovered its losses as investors digested the detail of the report.

British policymakers have long predicted that the fall in the value of the pound, which began in mid-2007, would rebalance the UK economy away from its reliance on domestic demand. That will be especially crucial in 2011 when public spending cuts start in earnest.

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