The UK imported £4.2bn more than it exported in August, the ONS data showed, up from £1.7bn in July, pushing sterling below $1.60, from its peaks above $1.63 in late September. This overall deficit came from a £9.8bn deficit in goods, partially offset by a £5.7bn surplus in services.
The figures will come as another blow to chancellor George Osborne’s hopes for the UK to “pay its way” in the world. Hopes of an export-led recovery were left in tatters, as UK exporters found it harder and harder to shift goods overseas.
“The prospect of export-led growth seems as remote as ever,” said economist Osman Ismail at the Centre for Economics and Business Research (CEBR). “For the three months to August, even services exports remain 2.8 per cent lower than the equivalent figure from a year ago,” he said.
Analysts predicted that the balance would only move further into deficit in the coming months.
“The UK goods trade balance will remain firmly in deficit into 2013 – slowing exports will be the key drag,” said Melanie Bowler at Moody’s Analytics. “Meanwhile, the services balance will deteriorate but remain in surplus.”
The goods deficit with the EU widened by £0.5bn to £4.9bn in August, while the deficit with non-EU countries expanded by £2.0bn to £5bn.
The data also revealed a £1.6bn – 24.1 per cent – fall in imports from Norway between the three months to May and the three months to August.
The Office for National Statistics told City A.M. that this was likely to be down to a strike in Norwegian gas production – but said they could not be absolutely sure without more detailed data.
If the trade gap stays wide, it could see the pound sink further, below its current 55-day moving average of $1.5905.