UK trade deficit widens as exports fall to 19-month low

The Office for National Statistics (ONS) said trade deficit increased to almost £10bn in the month, widening more than the expected £8.7bn, partly offset by an estimated £7.2bn on services.

Exports of goods decreased by four per cent between December 2013 and January 2014 to £24.2bn, while imports for the same period increased by 3.4 per cent to £34bn.

Goods exports to the EU decreased by £0.5bn to £12.2bn, while the decrease in exports outside the EU was attributed mainly to aircraft.

In January 2014 imports from the EU however were unchanged, while imports from outside the European area increased by £1.1bn to a total of £16bn.

David Kern, chief Economist at the British Chambers of Commerce (BCC) said: “Given the unusually small trade deficit in December, it is not entirely surprising to see it widen in January. Longer term comparisons, which are less volatile, show that in 2013 as a whole there was a significant fall in the deficit compared with 2012, so progress, albeit gradual, is being made.

“Nevertheless, the pace of the UK’s rebalancing towards net exports is far too slow, and if this continues we risk missing out on the Prime Minister’s target of exports reaching £1tn by 2020. Britain’s global business network must be significantly resourced so that UK companies can compete on a level playing field with their competitors in growing overseas markets, and we look to the Budget for further measures to strengthen trade finance and support.”

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