UK trade deficit shrinks in November on oil price slump

Jessica Morris
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Oil prices have fallen around 70 per cent since June 2014 (Source: Getty)

Britain's trade deficit shrank in November, as cheaper imports on the back of the oil price rout helped offset a record goods trade deficit with other EU countries.

The Office for National Statistics (ONS) said the UK's total trade deficit narrowed to £3.170bn in November, from £3.507bn a month earlier.

The deficit in goods alone narrowed to £10.642bn from £11.203bn, in line with economists' expectations for £10.5bn.

But economists said that they still expect the overall trade deficit to weigh on fourth quarter GDP.

"In October and November combined, the volume of goods exports was just 0.6 per cent higher than in the third quarter, compared to a 2.5 per cent surge in imports over the same period," Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.

"As a result, net trade looks set to subtract about 0.5 percentage points from quarter-on-quarter gross domestic product growth in the fourth quarter, assuming no erratic movements in December."

"With the real effective exchange rate still close to its pre-recession peak, net trade is likely to remain a significant brake on the economic recovery over the coming quarters."

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