Britain's trade deficit hits 15-year low

AFP, Saturday 11 Aug 2012

Britain's overall trade deficit in June hits the largest amount since 1997 recording $6.4 billion

(Photo: Reuters)

Britain's trade-in-goods deficit widened far more than expected in June as exports slumped, official data showed Thursday, dealing another blow to the country's chances of a quick exit from recession.

The deficit shot up to £10.1 billion in June from £8.4 billion ($12.6 billion) in May, the Office for National Statistics (ONS) said.

Market expectations had been for a trade deficit of £9 billion ($13.5 billion) in June, according to analysts polled by Dow Jones Newswires.

"There was a deficit of £10.1 billion ($15.1 billion) on goods, which was only partly offset by a surplus of £5.8 billion ($8.7 billion) on services," the ONS said.

Britain's overall trade deficit ballooned to £4.3 billion ($6.4 billion) in June -- the largest amount since comparable records began in 1997, the ONS said.

Goods exports in June fell 8.4 per cent from May to £23.5 billion ($35.2 billion) as trade dried up between Britain and the rest of the world -- not just the eurozone with which the country does most of its business.

"The weakness in exports was a result of sharp drops to both EU and non-EU countries," said Barclays analyst Blerina Uruci, who noted that trade data tended to be very volatile and subject to major revisions.

"Nevertheless, with the euro area in recession and the rest of the global economy slowing, the outlook for exports seems rather dismal and the prospects for any material rebalancing of the economy are not encouraging," she added.

The data comes a day after the Bank of England slashed its forecast for growth this year to close to zero percent, saying the greatest threat to recovery came from the eurozone debt crisis.

Non-eurozone member Britain escaped a deep downturn in late 2009 but fell back into recession at the end of 2011.

Latest official data showed GDP slumped 0.7 per cent in the second quarter from the first three months of this year.

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