Record UK trade deficit as planes halted by snow

 
Julian Harris
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EXPORTS fell in December, widening the UK trade gap in goods to a record £9.2bn from £8.5bn the month before, official data revealed yesterday.

The deficit in services narrowed slightly, to £4.4bn, from £4.5bn in November, the Office for National Statistics (ONS) reported.

As well as the debilitating effect of December’s freeze, the trade in aircrafts was identified as a possible cause behind the shock figures.

The ONS cited changes in the application of VAT to aircrafts as a possible cause behind a surge in imports.

“Aircraft imports rose by £0.7bn in value terms, accounting for more than half of the £1.1bn rise in overall goods imports,” noted Vicky Redwood of Capital Economics.

Overall, the deficit in goods and services rose to £4.8bn – from £3.9bn in November – while exports, excluding oil and erratic items, were down 1.3 per cent. Yet, the outlook for UK exports is bright, said Andrew Goodwin of the Ernst and Young Item Club. “There is evidence of strength across the world, but the main impetus is coming from emerging markets,” he said. “Exports of goods to China rose by 41 per cent in 2010.”