Britain's trade deficit widens

City A.M. Reporter
Britain's goods trade deficit widened more than forecast in February as exports to non-EU countries dipped, official data showed on Thursday.

The Office for National Statistics said the goods trade deficit grew to £8.7bn in February from an upwardly revised £7.8bn in January. Economists had forecast a gap of £7.7bn

The goods trade deficit with non-EU countries widened to £5.017bn in February from £3.7bn in January and against forecasts for a gap of £3.85bn.

The dip in export values was driven by falling sales of cars to countries outside the European Union, including the United States, China and Russia. Exports of oil, capital and intermediate goods to non-EU countries also fell.

The euro zone debt crisis has stoked fears that Britain's exporters and the country's feeble economic recovery could be hit hard. However, exports to countries using the euro ticked up in February.

Overall export volumes fell sharply on the month, but were still 0.5 percent higher in the three months to February when compared to the previous three month period, while imports were down two per cent.

Recent surveys and economic data indicated that Britain may have just skirted recession, returning to moderate growth in the first three months of 2012 after a contraction at the end of 2011.

However, a sharp slowdown in Britain's main trading partner, the euro zone, could still weigh on exporters' prospects, though some business surveys have shown that orders from outside Europe keep flowing in.