9th April 2015
Britain’s trade deficit widened by more than anticipated in February as exports fell markedly according to figures from the Office for National Statistics (ONS).
Official numbers show that the total deficit spread to £2.9bn over the month after narrowing less than previously reported to £1.3bn in January and £2.1bn in December.
After showing recent signs of improvement, exports suffered a relapse in February, chiefly as a result of a 6.6% fall in the exporting of goods to non-EU countries with exports to the US dipping.
Howard Archer, chief UK and European economist at IHS Global Insight said: “The trade data are undeniably disappointing and deal a significant blow to hopes that net trade helped UK GDP growth in the first quarter. Not only was February’s deficit appreciably larger than expected but also January’s shortfall was revised up significantly.”
While UK GDP growth will likely remain largely reliant on domestic demand, Archer believes it is realistic to hope that exports will increasingly benefit as 2015 progresses from a significant pick up in Eurozone growth supported by a weak euro, low oil prices and major ECB stimulus.
He said: “Eurozone GDP growth looks likely to have improved further in the first quarter of 2014 after rising to 0.3% quarter-on-quarter in the fourth quarter of 2014. We forecast Eurozone GDP growth to strengthen from 0.9% in 2014 to 1.6% in 2015, which would be helpful for UK exporters. However, the current strength of the pound against the euro will be of concern to UK exporters. Sterling traded at a seven-year high against the euro in March.”