The deficit of traded goods rose to £7.5bn from £6.3bn the month before as imports excluding oil jumped five per cent month-on-month in March. In contrast, exports edged up just 0.1 per cent. The overall trade deficit widened from £2.2bn to £3.7bn as services surplus narrowed to £3.8bn in March, compared with the surplus of £4.1bn in February.
The widening in the goods deficit was particularly due to cars, intermediate goods, semi manufactures and chemicals – unsurprising, analysts said, given March’s strong industrial production data.
BNP Paribas’ Alan Clarke said: “The jump in imports of semi manufactures and intermediate goods are understandable in the context of the super-strong jump in manufacturing output during March.”
Although a weak pound has improved British manufacturers’ international competitiveness, economists said there will be little improvement to net trade unless overseas demand picks up.
Vicky Redwood at Capital Economics said: “Although the upbeat measures of export orders suggest that an improvement could be seen in the near-term, recent events in the Eurozone – the UK’s biggest trading partner – clearly cast a shadow over the longer-term prospects for UK exporters.”
BNP Paribas’ Clarke added: “Net exports are one of the greatest hopes for growth this year and next given the improvement in competitiveness associated with the sterling.”
“But thus far, all the weakening in sterling has brought is inflation and we are still holding our breath for the long awaited boost to growth,” he added.