Britain’s goods trade deficit narrowed slightly in November, helped by a pick-up in exports to recovering economies in Europe, official data showed yesterday.
The Office for National Statistics said the deficit shrank to £9.44 billion, in line with economists’ forecasts in a Reuters poll, from £9.65 billion in October.
Britain’s economy staged an unexpectedly strong recovery last year, but the turnaround was driven mainly by domestic spending, frustrating the government’s plan to get the economy more focused on exports.
Economists have been surprised that exports have been so weak in recent months even as an incipient recovery gets underway in the global economy, including among some of Britain’s main trading partners in the eurozone.
Private surveys of British companies have shown a stronger picture for exports than the ONS data in recent months.
Even if imports pick up, Britain is likely to carry on importing more than it exports as the country’s turnaround fuels domestic demand.
Over the three months to November, exports were down 2.3 per cent, slowing their pace of decline in the two previous months, while imports rose 1.1 per cent.
In November, exports were boosted by increased sales to several other countries in the EU, in particular chemical products exported to Germany, an ONS official said.
Exports to the EU rose to £12.75 billion in November, their highest level since August.
Imports to Britain from the EU hit an all-time high, pushed up by cars as British consumers took advantage of cheap finance deals which have propelled registrations in 2013 close to their levels before the financial crisis.
The goods trade deficit with non-EU countries narrowed to £3.02 billion in November from £3.11 billion in October and smaller than forecasts for a gap of £3.5 billion.
Including Britain’s surplus in trade in services, the overall trade deficit narrowed to £3.24 billion from £3.50 billion in October.
In contrast to Britain’s struggling export performance, Germany reported a trade surplus of nearly €18 billion in November and its exports rose for a fourth month in a row, data showed on Wednesday.
Net trade was a big drag on quarterly economic growth in the July-September period when it lopped 1.2 percentage points off GDP and helped push the current account deficit to its highest level in 24 years in the quarter.
A first estimate of economic growth in the fourth quarter is due to be announced on January 28. Britain’s economy grew by 0.8 per cent in the third quarter, compared with the previous three months, taking annualised growth to more than three per cent.