The volume of exports fell by 6.5%, to its lowest monthly level since December 1996.

The high pound has hit exporters

The merchandise trade gap was much larger than expected, compared to the £1.1bn figure in the previous month.

But the total balance of trade on goods and services, which takes account the UK's positive balance on "invisible exports" like insurance, was unchanged in August at -£0.2bn, the same figure as July.

Michael Dicks of Lehman Brothers said that the markets would probably focus on the negatives:

"The bad news is probably more important in the sense the markets are looking for it. I think people will see the deterioration in the non-EU figures that was more than expected as more important than the global trade figures."

Global figures better

The global merchandise trade deficit for August was a better-than-expected £1.25bn, compared to a deficit of £1.4bn in July.

That was because of a fall in imports, which may be related to the slowdown in the UK economy.

Britain exported £13.8bn worth of goods worldwide in August, unchanged on the previous months, but imported £15bn, less than in July.

The Office of National Statistics said that the trend in the global trade gap was "broadly flat."

Manufacturers have long complained that the Asian crisis and the high pound has hit exports, and the CBI industrial trends survey out Tuesday is expected to confirm their gloomy expectations for the future.

The recent fall in the pound against the German currency, the Deutschmark, has restored some of the UK's lost competitiveness as regards Europe.

But the figures seem to suggest that the UK's export markets outside Europe are continuing to deteriorate as a result of the global crisis.