Britannia Radio

UK trade deficit balloons to a record

The UK trade deficit unexpectedly widened to a record in November as the global economic slump hurt demand for British products abroad.

 

Last Updated: 11:16AM GMT 13 Jan 2009

The goods-trade gap was £8.3bn, compared with £7.6bn in October, the Office for National Statistics said today. Economists predicted £7.5bn, according to a Bloomberg News survey.

The Bank of England last week cut the benchmark interest rate to 1.5pc, the lowest in its history, to combat the recession. Policy makers said that the world economy ``appears to be undergoing an unusually sharp and synchronised downturn'' which will hurt global trade.

``We see another rate cut in February,'' said David Page, an economist at Investec Securities. ``The bank is aware that we're going through a particularly sharp adjustment in global demand.''

Exports fell 5.8pc on the month while imports dropped 1.8pc, the statistics office said. Overseas sales of oil, chemicals, cars and other commodities slipped.

The goods trade gap with countries outside the European Union widened to 5.3bn pounds in November, the most on record. The trade surplus with the U.S. narrowed to £301m, the smallest since February 2007, the statistics office said today.

Oxford, England-based Electrocomponents Plc, a supplier of 350,000 products from cables to calculators, said last month sales worsened on weaker demand in Europe, the Asia-Pacific region and the U.S.

The International Monetary Fund forecasts recessions in the US, Japan and the euro area. The UK economy contracted 0.6pc in the third quarter after stalling in the second, government data show.