Trade deficit worse than expected

Britain has been running a trade deficit for a number of years

The UK trade's deficit with the rest of the world for December came in worse than experts predicted, Office for National Statistics figures show.

The shortfall on trade in goods was £7.574bn in December, down from £7.910bn in November but more than analysts' expected figure of £7.35bn.

The total deficit on trade in goods and services narrowed from £4.801bn in November to £4.723bn in December.

For 2007, the UK's deficit on goods and services rose to £51bn from £46.4bn.

'Inflation worries'

The trade figures were accompanied by data showing price inflation of goods leaving UK factories had reached its highest rate in 16 years.

Paul Dales, analyst at Capital Economics, said: "This morning's terrible UK producer prices and trade data will deepen the inflation worries that are preventing the MPC from cutting interest rates sharply.

"December's trade data revealed the first increase in cost of finished manufactures imports since July, perhaps reflecting the recent drop in the pound."

The deficit with the EU (27 countries including Bulgaria and Romania) was £3.5bn, the same as in November. However, the deficit with non-EU countries narrowed to £4.1bn compared with the deficit of £4.4bn in November.