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Trade deficit widens in January

The UK’s deficit on trade in goods and services was £3.8 billion in January, compared with a deficit of £2.6 billion in December, according to figures released today by the ONS.
The surplus on trade in services was slightly down at £4.2 billion in January, compared with a surplus of £4.4 billion in December.

The deficit on trade in goods was £8.0 billion in January, compared with a deficit of £7.0 billion in December, and was the widest deficit since August 2008.

Disappointing trade figures for January.

Although the deficit with EU countries fell to £3.2 billion in January, compared with a deficit of £3.6 billion in December, the deficit with non-EU countries widened to £4.8 billion in January, compared with a deficit of only £3.4 billion in December. Trade with non-EU countries reflected a fall in exports of 12.5% on the month and a rise in imports of 1.6%.
Overall, excluding oil and erratic items, the volume of exports fell by 6.0 per cent and the volume of imports fell by 1.2 per cent, compared with December.

These numbers are particularly disappointing, as we would have expected a boost from the decline in the value of sterling. In fact over the month export prices fell by 0.6 per cent but import prices rose by 0.6 per cent as might have been expected, but this has not been reflected in an improvement in our trade balance.

Exports may have been hampered by the bad January weather, or this may be a one-month ‘blip’. We shall have to wait and see what happens next month, but the increasingly negative figures are not going to help the recovery of GDP growth this quarter, following on from the 0.3 growth in the final quarter of 2009.

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Posted in Balance of Trade, economic growth, sterling

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