‘Support export’ call as trade deficit sees £4.1bn surge

Domestic demand  for goods alone cannont drive UK growth
Domestic demand for goods alone cannont drive UK growth

Britain’s trade deficit surged to £4.1 billion in October as imports rose to their highest level for nearly a year, according to official figures.

The Office for National Statistics (ONS) said the total trade deficit for goods and services widened by a higher-than-expected £3.1bn between September and October, with the strong pound and global economic slowdown hitting demand for exported goods.

It added that the deficit for goods alone ballooned to £11.8 billion from £8.8bn in September.

With oil and other volatile goods stripped out, the deficit was the biggest since ONS records began.

The figures highlight the UK’s reliance on domestic demand to drive growth, with economists concerned that too much of the economy is dependent on consumer spending fuelled by borrowing.

While the monthly figures can be highly volatile, the three month data to October also showed the scale of the challenge in closing the trade gap, with the deficit on trade in goods and services estimated at £8.4bn, up by £2.4bn from the three months to July.

The British Chambers of Commerce (BCC) warned the deficit could prove a drag on UK growth in the fourth quarter.

Chief economist David Kern “It is clear that our exports are not growing fast enough to close the gap.”