UK trade deficit widens again

The UK is importing more and more manufactured goods like cars

Britain's trade deficit with the rest of the world has risen again, according to the latest official figures.

The Office for National Statistics said the UK imported £4.4bn ($8bn) worth of goods more than it exported in November, up from £4.25bn in October.

In the past three months the UK has a record trade deficit of £13.2bn.

Reduced production of North Sea oil due to maintenance was one reason for the deficit, but the declining dollar is also hurting UK exports to the USA.

Dollar weakness

Exports to the United States fell by nearly 10% in November to £2.3bn, despite the rapid growth in the US economy, which grew by 8% in the third quarter of the year.

This accounted for two-thirds of the drop in exports for the month.

Another poor set of trade data Geoffrey Dicks, chief economist, RBS financial markets

Since then, the dollar has fallen further against the pound to an eleven-year low of $1.83.

The higher pound makes UK goods more expensive in the US, and may dash hopes that a booming global economy will help spark UK economic growth.

"It normally takes longer for currency effects to feed through. So, it's entirely possible that if sterling remains at the current level over the course of the next few months, we are going to find that exports to the US could be well under more pressure," said Commerzbank economist Peter Dixon.

It was "another poor set of trade data," according to Geoffrey Dicks of RBS financial markets.

Liberal Democrat trade spokesman Malcolm Bruce warned of the "imbalance in the British economy."

"There is a continued decline in the manufacturing industry, combined with the inability of services and tourism to close the gap. The UK's economy is now heavily dependent on property inflation to maintain its momentum. This is an very unhealthy state of affairs."

For the Conservatives, shadow trade secretary James Arbuthnot said:

"The Government¿s interference in business decisions, its imposition of new red tape - 15 new regulations a day - and its ever increasing demands in taxation are tying the hands of British businesses behind their backs. It is not surprising that exporters are having a difficult time."

Services help

The UK traditionally counterbalances its shortfall in trade in goods with a surplus in the supply of services, such as transport, banking, and insurance, to the rest of the world.

In November trade in services showed a £1.1bn surplus, compared to £1.0bn in October, and this lowered the overall trade deficit to £3.3bn.

However, exports of North Sea oil were in surplus by just £200m in November, compared to £235m in October.

In previous months maintenance shutdowns of North Sea oil rigs have reduced the UK's trade surplus in oil.

Even taking into account services, the overall trade balance fell to a record £10.2bn deficit in the three months to November, compared to £9.2bn in the three months to August.

Nearly all of the UK's trade deficit is accounted by its deficit in finished manufactured goods like cars, which reached £9.8bn in the three months to November.

According to the Office for National Statistics, the trend suggests that the overall trade deficit is continuing to widen.