UK goods trade deficit increases

The annual goods deficit hit a record

The UK's goods trade deficit with the rest of the world widened unexpectedly in December, according to the Office for National Statistics (ONS).

The ONS said the gap hit £6.06bn in December, up from £6.01bn in November as chemical imports rose and exports of capital goods fell.

However, the gap in both goods and services narrowed to £4.4bn, after a deficit of £4.5bn in November.

For the whole of 2005, the UK's goods deficit hit a record £65.5bn.

The deficit on goods and services also hit a record of £47.6bn, compared with a £39bn deficit in 2004.

'Food for thought'

"This should serve as food for thought for the Bank of England," according to Jonathan Said, economist at Capital Business & Economic Research (CBER).

"However we do not expect it to influence its interest rate decision in the short-term.

"If economic growth loses steam in the second half of the year, the trade deficit will back the argument for lower rates."

In December, there were increases in imports from non-EU countries of chemicals, and of fuels other than oil, offset partially by lower imports of oil and aircraft.

The deficit on trade in goods with the EU in December was £2.9bn, down from £3.0bn in November.

Exports of oil to EU countries rose, while imports of consumer goods other than cars also rose, the ONS said.