Widening in Britain's trade deficit in September due to surging imports

A SURGE in imports saw Britain&rsquo;s trade deficit unexpectedly widen in September to &pound;3.5bn from &pound;2.2bn, raising the possibility that net trade probably contributed to the drop in GDP in the third quarter.<br /><br />The UK&rsquo;s deficit on trade in goods was &pound;7.2bn in September while the surplus on trade in services fell to &pound;3.7bn from &pound;3.9bn in August.<br /><br />Nonetheless, analysts said it was encouraging that the widening in the deficit was almost entirely down to the 7.5 per cent monthly rise in imports, while exports managed to post a 3.9 per cent rise. These figures suggested a strengthening in domestic demand and an improvement in UK exporters&rsquo; competitiveness, helped by the pound&rsquo;s recent weakness. <br /><br />But with net trade likely to have made a broadly neutral contribution to GDP growth in the third quarter, September&rsquo;s UK trade figures put something of a dent in hopes that a stronger contribution from the external sector will help to fuel a robust recovery in the overall economy over the coming quarters, said Capital Economics&rsquo; Jonathan Loynes.