Britain's trade deficit narrowed in November as exports rose more than imports, but the fall was below forecasts, which economists warn will act as a drag on growth and further threatens a triple-dip recession.
The UK goods trade deficit shrank to £9.2bn in November, from £9.5bn in October, according to figures out on Wednesday by the Office for National Statistics. Economists had forecast that the gap would fall to £9.05bn.
The goods deficit was partly offset by a £5.7bn surplus on services. Trading with the EU rose substantially in November, with a 8.9pc jump in exports of traded goods to the 27-state bloc, with sales to Germany seeing a marked rise.
Even so, exports of traded goods to EU countries were still down by 5.9pc year-on-year in the three months to November, highlighting their underlying softness.
Much hope has been placed on UK manufacturers’ exports to countries beyond Europe but the goods trade deficit with non-EU countries widened to £4.52bn in November, slightly up from £4.5bn in October, confounding forecasts that the gap would fall to £4.2bn.
Exports were lifted in November by a 8.9pc jump in exports of traded goods to EU countries, with sales to Germany seeing a marked rise.
Including Britain's traditional surplus in trade in services, the overall trade deficit shrank to £3.5bn in November from £3.7bn.
Rob Wood from Berenberg Bank said that while the figures can be volatile from month to month, the overall trade balance was "disappointing".
"I think he best way to describe the economy is fragile but stable and it will remain this way for the next couple of quarters," he said.
This takes the trade deficit in the first two months of the final quarter to over £7bn, not far off the deficit for the whole of the third quarter.
Taking the first 11 months of 2012 together, the goods trade deficit has been running at an average of £8.9bn a month, compared to £8.4bn in 2011, the ONS said. This dampens the government's hopes that Britain will rebalance away from an over-reliance on imports.
Martin Beck, UK economist at Capital Economics, said November’s trade data suggested that the external sector was still failing to provide any support to the recovery.
"Without a marked turnaround in December, net trade looks like it may well drag on GDP growth in the final quarter of the year. But prospects for such a turnaround are slim," he said.
"The weakness of the eurozone economy means that any marked narrowing of the deficit is a distant prospect."
Howard Archer, economist at IHS Global Insight, said the "relatively limited" improvement in the deficit meant it still looked "more likely than not that net trade was negative in the fourth quarter, thereby increasing the risk that there was a renewed dip in GDP".
The latest figures are another blow to the UK's growth prospects, after PMI figures by Markit out earlier this month showed that Britain's services sector, which makes up three-quarters of the UK economy, shrank for the first time in two years in December, raising fears of a triple-dip recession.
Markit said this figures, combined with mixed manufacturing and construction figures which were also out at the start of the year, mean that Britain posted its worst quarterly performance for three-and-a-half years, and suggest the economy contracted by 0.2pc in the last quarter of 2012.
Despite a weak outlook for British economic growth, the Bank of England is unlikely to extend its stimulus programme on Thursday, as worries about stubborn inflation take precedence.
telegraph.co.uk
The UK goods trade deficit shrank to £9.2bn in November, from £9.5bn in October, according to figures out on Wednesday by the Office for National Statistics. Economists had forecast that the gap would fall to £9.05bn.
The goods deficit was partly offset by a £5.7bn surplus on services. Trading with the EU rose substantially in November, with a 8.9pc jump in exports of traded goods to the 27-state bloc, with sales to Germany seeing a marked rise.
Even so, exports of traded goods to EU countries were still down by 5.9pc year-on-year in the three months to November, highlighting their underlying softness.
Much hope has been placed on UK manufacturers’ exports to countries beyond Europe but the goods trade deficit with non-EU countries widened to £4.52bn in November, slightly up from £4.5bn in October, confounding forecasts that the gap would fall to £4.2bn.
Exports were lifted in November by a 8.9pc jump in exports of traded goods to EU countries, with sales to Germany seeing a marked rise.
Including Britain's traditional surplus in trade in services, the overall trade deficit shrank to £3.5bn in November from £3.7bn.
Rob Wood from Berenberg Bank said that while the figures can be volatile from month to month, the overall trade balance was "disappointing".
"I think he best way to describe the economy is fragile but stable and it will remain this way for the next couple of quarters," he said.
This takes the trade deficit in the first two months of the final quarter to over £7bn, not far off the deficit for the whole of the third quarter.
Taking the first 11 months of 2012 together, the goods trade deficit has been running at an average of £8.9bn a month, compared to £8.4bn in 2011, the ONS said. This dampens the government's hopes that Britain will rebalance away from an over-reliance on imports.
Martin Beck, UK economist at Capital Economics, said November’s trade data suggested that the external sector was still failing to provide any support to the recovery.
"Without a marked turnaround in December, net trade looks like it may well drag on GDP growth in the final quarter of the year. But prospects for such a turnaround are slim," he said.
"The weakness of the eurozone economy means that any marked narrowing of the deficit is a distant prospect."
Howard Archer, economist at IHS Global Insight, said the "relatively limited" improvement in the deficit meant it still looked "more likely than not that net trade was negative in the fourth quarter, thereby increasing the risk that there was a renewed dip in GDP".
The latest figures are another blow to the UK's growth prospects, after PMI figures by Markit out earlier this month showed that Britain's services sector, which makes up three-quarters of the UK economy, shrank for the first time in two years in December, raising fears of a triple-dip recession.
Markit said this figures, combined with mixed manufacturing and construction figures which were also out at the start of the year, mean that Britain posted its worst quarterly performance for three-and-a-half years, and suggest the economy contracted by 0.2pc in the last quarter of 2012.
Despite a weak outlook for British economic growth, the Bank of England is unlikely to extend its stimulus programme on Thursday, as worries about stubborn inflation take precedence.
telegraph.co.uk
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