Trade deficit widens to record gap in November

Britain's goods trade deficit with the rest of the world widened to a record level in November, official data showed yesterday, suggesting weaker sterling failed to boost exports as policymakers had hoped.

The Office for National Statistics said that the country's goods trade gap grew to £8.330 billion in November from October's downwardly revised £7.631 billion, the biggest since records began in 1697. Economists had forecast a deficit of £7.5 billion.

The goods trade gap with non-EU countries also hit a record, expanding to £5.304 billion from £4.437 billion. Analysts had forecast a deficit of £4.25 billion.

The Bank had been hoping that the weaker pound would help support British exports during the global downturn and rebalance the economy away from its dependence on domestic consumption. This data provides little evidence of this.

Sterling fell to a session low against the dollar after the data, near $1.46. "Yet more bad news," said Alan Clarke, UK economist at BNP Paribas. "The trade figures reinforce expectations that we are going to see a horrific contraction in GDP in the fourth quarter."

Total exports of goods fell by six per cent in November, while imports fell by just two per cent. Exports to EU countries were virtually unchanged, but exports to non-EU countries tumbled 12.5 per cent.

A fall-off in exports to the US, down £645 million, made up around half of the overall fall in exports.

Economists have treated British trade data with caution in recent years due to the effects of import-export sales tax fraud within the EU, although the ONS says that the effect of this is now greatly reduced.