Lower oil prices help narrow UK trade gap

Falling oil prices are complicating the measurement of economic progress
Falling oil prices are complicating the measurement of economic progress

Britain’s trade deficit fell to a 17-month low in November - helped by cheaper oil - while the manufacturing sector grew at its strongest pace in seven months, official figures have shown.

The shortfall between exports and imports narrowed to £1.4 billion from £2.2bn the previous month, the smallest since June 2013.

Manufacturing grew by 0.7 per cent, reversing a contraction of the same size the previous month. It equalled the pace of growth in April and has not been better since last February.

However, the wider production sector slowed by 0.1 per cent, dragged lower largely by oil and gas extraction due to maintenance work in the North Sea.

Meanwhile, a third set of figures - all of them published by the Office for National Statistics (ONS) - showed the construction industry shrank by two per cent in November, its second monthly fall in a row.

Some experts said the data added to fears that the recovery was slowing in the fourth quarter, with unofficial survey results pointing to growth of 0.5 per cent for the last three months of the year, down from 0.7 per cent in the third quarter.

Markit chief economist Chris Williamson said: “Disappointing official data are adding to survey evidence which indicate that the rate of UK economic growth slowed towards the end of last year.”

He said it meant the Bank of England would take an “increasingly cautious” approach on when to raise interest rates from their current low of 0.5 per cent.

But David Kern, chief economist at the British Chambers of Commerce, said the were better than expected with the narrowing of the deficit for the second month in a row “particularly welcome”.