Britain’s goods trade gap narrowed in January to its smallest in nearly a year – at the equivalent of eight point two billion euros. December’s reading was the worst in at least 30 years at 11.3 billion euros.
High levels of oil exports helped drive the improvement. It will be a relief for policymakers who are hoping exports will aid the UK’s economic recovery as domestic demand remains weak.
However, economists cautioned that monthly trade figures were notoriously volatile and December’s severe winter weather may have distorted them.
A contraction in the British economy in the fourth quarter — fuelled by the cold weather — was one reason why policymakers were reluctant to raise UK interest rates at the Bank of England’s last meeting. A better first quarter 2011 is widely expected to trigger the rise by June.
December was Britain’s coldest in a century and heavy snowfall disrupted road, rail and air transport.