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UK trade deficit increases

13/04/2012

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Latest figures from the Office for National Statistics (ONS) have revealed that the UK's trade deficit has widened in February.

The ONS statistics show the UK's deficit on seasonally adjusted trade in goods and services increased from £2.5bn in January to £3.4bn in February, whilst the deficit on seasonally adjusted trade in goods rose to £8.8bn in February, up from January's £7.9bn.

The surplus on seasonally adjusted trade in services for February was estimated to have experienced no change from January, remaining at £5.4bn.

Furthermore the seasonally adjusted volume of exports, excluding oil and erratic items, was 5.3% lower, and the volume of imports was 0.9%, lower in February compared with January.

Commenting on statistics, David Kern, Chief Economist at the British Chambers of Commerce, said: "The trade deficit increase in February is disappointing, especially as the volume of exporting goods fell by more than five percent, while imports declined by less than one percent. Although the monthly trade figures can be volatile, and not too much weight should be given to one single figure, it is clear that the rebalancing of the economy towards exports is too slow.

"With the government's deficit cutting measures squeezing domestic demand, a sustained UK recovery relies on exports, business investment, and replacing imports with domestically-produced goods. Given the renewed debt problems in the eurozone and difficulties in the global economy, British exporters will face challenges in maintaining their position in international markets.

"The government must act to address these issues by giving small- and medium-sized firms in particular extra support in key areas such as trade finance, insurance, promotion, market knowledge and skills. It is crucial to enable British firms to compete on equitable terms. While low interest rates and a competitive pound will help to reduce our deficit, British exporters must reinforce their efforts to break into faster growing markets such as China, India and Brazil."