UK's goods trade deficit surged to record high of 9.247 billion pounds in December from 8.460 billion in the previous month, the Office for National Statistics announced on Wednesday. The widening of the deficit was larger than economists' consensus forecast of 8.6 billion pounds.
The deterioration in the UK’s trade position in December probably partly reflects the bad weather, but the underlying trend is still pretty dismal, Vicky Redwood, senior UK economist at Capital Economics wrote in a note.
The overall trade deficit widened from £3.9bn to £4.8bn, the statistics office said. Volumes of exported goods slipped by 0.1 percent month-on-month, compared to a 2 percent jump in imports, but it is not obvious why the snow should have disrupted exports more than imports, Redwood noted.
Nonetheless, the trade balance widened sharply during the snow in January 2010, only to narrow subsequently. So we expect the latest deterioration to be more or less reversed in January – especially as imports were also boosted by a temporary jump in aircraft imports ahead of a tax change in January.