Tom Keighley

UK trade deficit widens

The UK’s trade deficit widened in October, moving from £2.5bn in September to £3.6bn.

According to the ONS, there was a deficit of £9.5bn on goods, partly offset by an estimated surplus of £5.9bn on services.

Excluding oil and erratic items, the deficit in goods was £22.9bn in the three months to October, This was £0.5bn higher than the preceding three months, but £0.4bn less than the deficit in the three months to October 2011.

Exports of goods to the EU were 5.2% lower in the three months to October, but those to the rest of the world rose by 9.1%.

Across the three months to October, exports to France increased by £0.3bn and exports to Germany decreased by £0.4bn.

Among non-EU countries, exports to South Korea fell by £0.5bn and exports to Switzerland fell by £0.4bn.

The ONS said figures for exports of goods have been variable throughout 2012, possibly reflecting the increased public holidays.

On Wednesday, as the Chancellor gave his Autumn Statement in Parliament, the Office for Budget Responsibility (OBR) revised its original forecasts for the contribution to growth from net trade, although predictions were still positive.

OBR added that, as a major contributor to the double dip recession, disappointing trade results indicated a weak export market and a falling market share for Britain.

Speaking on Wednesday, the chairman of OBR, Robert Chote, added: “We have revised up our estimate of the contribution that government consumption makes to growth.

“This is in recognition of the fact that over the past two years the output of goods and services from the government sector as recorded by the ONS has been affected much less by the ongoing cuts in cash spending than we assumed would be the case in our previous forecasts.”

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