UK trade deficit widens to biggest in 17 months
The UK's trade gap with the rest of the world widened unexpectedly in January to its largest since August 2008.
Exports saw their sharpest drop in more than three years, according to the Office for National Statistics (ONS).
The UK's trade gap in goods and services widened to £3.8bn, compared with £2.6bn in December.
The news came as a disappointment and caused the pound to weaken, dipping 0.4% to 1.10 euros and losing 0.75% against the dollar to below $1.50.
The UK's currency has fallen by some 24% against a basket of world currencies since early 2007 - before the global economic crisis.
That fall in the value of the pound, making UK goods cheaper abroad, might have been expected to boost sales overseas.
But BBC economics editor Stephanie Flanders said that in difficult economic conditions, UK manufacturers may have taken advantage of a weaker sterling to increase their profit margins rather than increase sales.
"There is no doubt that the sharpest fall in the value of sterling since the war happened at a bad time for exporters to make the most of it," she said.
"It is perhaps not surprising that our exporters tried to extract every last penny out of the demand that was still there."
Increased imports
The trade gap in physical goods widened to £7.99bn, well above the £7bn economists had forecast.
Meanwhile, December's figure was revised down to £7bn from its original £7.3bn.
The goods trade gap with non-European Union countries was also wider than forecast.
That stood at £4.8bn, from £3.4bn in December, after exports to countries outside the EU dropped by 12.5% on the month and imports rose by 1.6%.
The ONS said there was no obvious reason for this month's deteriorating picture, although some have suggested that the particularly bad weather in January may have disrupted trade flows.
The unexpected data came as a surprise - and a disappointment - to experts.
Jeremy Stretch, senior market strategist at Rabobank, said: "It could be that the weakening of sterling is taking time to feed through - but that may be painting too much of a positive on a negative set of numbers."
"It's a pretty disappointing number," said analyst Alan Clarke, of BNP Paribas.
"Trade is one area where people have been expecting an improvement but it doesn't seem to be happening. In the big picture this is bad news for quarter one GDP."
Posted at 08:47PM Mar 09, 2010 by Kelly Board in UK Economy News | Comments[0]
Retail Sales Improve in February
January’s cold snap seems to have boosted retails sales in February after shoppers moved to obtain the goods they were forced to postpone the previous month. This has come from the British Rail Consortium (BRC), as like for like sales have gone up 2.2% after a fall in January.
However, the figures are being treated with caution, as last February, trading figures were very poor following weather similar to what happened in January. Food sales also grew at their slowest rate since 2007, leading to mixed feelings about the latest figures.
“Despite appearances, these results are not that strong," commented Stephen Robertson, director general of the BRC.
"The growth is compared with very weak figures a year ago when February saw the worst of last winter's weather and this February's performance was helped by sales postponed from January - particularly sales of non-food items such as homewares and fashion."
Confectionary and Jewellery had a very good month as sales improve during the lead up to Valentine’s Day, while the sales delays in January led to the best sales coming over the first week of February.
The poor food figures are thought to be due to the panic buying and stock piling in January as people sought to make sure they had plenty of food during the bad weather.
The end of the bad weather also saw online and telephone sales boom, as deliveries were allowed to begin again, they were up by 15.5% compared with February last year.
Posted at 09:53AM Mar 09, 2010 by Marc Stenton in UK Economy News | Comments[0]
