The total deficit with the rest of the world reached £3.6bn, up from £2.5bn, according to data from the Office for National Statistics out yesterday. October’s increased gap came from a £534m jump in goods imports, which together with a £258m hit to goods exports brought the goods deficit up to £9.5bn, from £8.4bn in September.
The three month deficit in goods was an all-time record of £28bn. But the monthly goods deficit, though higher than last year’s £8.1bn gap, was not quite as wide as August’s £10.1bn.
These trade statistics will only add to gloomy forecasts for the fourth quarter GDP figures – especially after the Office for Budget Responsibility (OBR) blamed most of the economy’s continued weakness on worse-than-expected net trade.
And despite some bright sparks in the US, China and elsewhere, analysts said a sustained Eurozone crisis will put a dent in any remaining hopes of a robust export-led recovery from the recession. “The OBR expects net trade to provide some modest support to the economy over the next few years,” said Martin Beck at Capital Economics. “But in the near term we don’t think the economic recovery can rely on the export sector.”
Yet Daiwa analysts played down the implications of the data, saying much of the fall could be attributed to Hurricane Sandy – since exports to the US fell some 15 per cent in just a month.