Page last updated at 10:44 GMT, Tuesday, 10 February 2009

Surprise fall in UK's trade gap

Oil pipeline
December saw a 2.5% fall in imports

The UK's deficit on trade in goods with the rest of the world fell to an 18-month low in December.

Britain's goods trade gap fell to 7.367bn from a record 8.114bn in November, the Office for National Statistics (ONS) said.

That was the lowest the gap - the difference between imports and exports - has been since June 2007 and was well below analysts' forecasts of 8.1bn.

The narrowing gap was driven by a 2.5% fall in imports.

The ONS said the fall in demand for overseas goods may have been as a result of the weak pound, however, it also noted that the deficit was coming down from a record level in November.

Overall it's nice to have some good news for a change. Sadly we're unlikely to get much more
Vicky Redwood, Capital Economics
Total exports were up slightly in December, 0.5% higher than the previous month.

The ONS provisionally estimated the trade deficit for 2008 as a whole at 93.2bn, compared with 89.3bn in 2007.

'Surprisingly upbeat'

Analysts welcomed the data but were cautious about the overall economic outlook.

"The latest UK data gave a surprisingly upbeat picture of the economy around the turn of the year," said Vicky Redwood from Capital Economics.

"Overall it's nice to have some good news for a change. Sadly we're unlikely to get much more," she added

Howard Archer from Global Insight said: "The bad news is that this narrowing in the deficit was due to weakness in imports rather than strength in exports."

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