2006-01-11

Money & Stats: UK Trade Deficit Worst in 300 Year History

Britain's trade deficit on goods swelled to a record 6_000_million_GBP in 2005-11, official figures showed today 2006-01-11. 'The Office for National Statistics' (ONS) said the trade gap in goods widened from 5_100_million_GBP in 2005-10 to 6_000_million_GBP in 2005-11 -- the highest level since records began during the reign of William of Orange more than 300 years ago. The 2005-11 gap surpassed the previous record of 5_900_million_GBP set in 2005-08. Analysts described the figure as 'shocking' and said that it dashed any hopes that net trade could have boosted growth in the fourth quarter.
'The trade data are extremely disappointing, not only in terms of November's record traded goods deficit but also given the upward revisions to the back data,' said Mr.Howard Archer of 'Global Insight'.
ONS revised the trade deficit for goods and services for 2005-10 upwards to 3_400_million_GBP. The figure increased to 4_500_million_GBP in 2005-11.
'It's a shocking number, much worse than expectations,' said Mr.Philip Shaw of 'Investec'. 'At first glance it's difficult to ascribe the blame to one-off items ... 'There are no significant implications for interest rates, but a widening of the UK's external balance will not be welcomed at "The Bank of England".'
The overall trade performance was dragged down by a fifth successive deficit in oil trade and a reduced surplus in services. On a more upbeat note, UK exports to the eurozone gained momentum in 2005-11, up 8 per cent year-on-year. Analysts said that this was an indication that the recent improvement in the region's growth is having a positive effect on British exports. Meanwhile, a significant rise in UK imports indicated that domestic demand could be picking up. British consumers reined in spending in 2005 after a series of interest rate rises and a weakening of the housing market. While economists expressed disappointment with today's data, the ONS itself has raised questions about the reliability of its trade figures because of fraud and seasonal adjustment. The pound fell two thirds per cent to 1.752 7_USD, the week's low, as sterling came under pressure after the release of the trade data. 'UK trade deficit hits record high', Mark Tran, 2006-01-11, We

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