Weak sterling of little help to Britain’s huge trade deficit

BRITAIN’S trade deficit narrowed slightly in November but the small improvement was not enough to claw back the sharp deterioration seen over the preceding months and provided little evidence that a weak sterling was having any beneficial effect.

Figures from the Office for National Statistics, published yesterday, revealed that the trade deficit in goods fell to £6.8bn from £7bn entirely as a result of imports falling by £200m, while export volumes remained flat.

Although there was little visible contribution from sterling, analysts remained hopeful that a weaker currency would start to have a positive effect on the UK’s trade position.

Andrew Pilkington, economist at the Centre for Economic and Business Research (CEBR) said: “The weaker sterling value will cause the UK economy to rebalance further away from reliance on external debt; we will see a structurally lower trade deficit than prior to 2009.”

Across the Atlantic, there was disappointment as the US trade deficit hit a 10-month high in November as imports outpaced exports. Net trade is now likely to only have a neutral effect on fourth quarter growth.