Business

UK trade deficit narrows after oil price falls

Port workers inspect containers before they are unloaded as the largest container ship in world Image copyright Reuters

The falling price of oil helped to narrow the UK's trade gap with the rest of the world in November to its lowest since June 2013, official figures show.

The Office for National Statistics (ONS) said the UK's deficit in goods and services was £1.4bn in November, compared with £2.2bn in October.

But it said this reflected a fall in the value of imports rather than an increase in export activity.

Imports fell £1.1bn in the month, which included a £0.7bn fall in oil imports.

The price of Brent crude oil has fallen by more than 50% since August. The drop has been blamed on oversupply, in part as a result of increased domestic oil production in the US, and slowing demand, particularly in China.

The UK's £8.8bn deficit in goods was partly offset by its £7.4bn surplus in the supply of services.

The trade gap represents the difference between the value of goods and services we export around the world against the value of those we import.

Separate figures from the ONS indicated UK industrial and construction activity eased in November.

Industrial production shrank 0.1% between October and November, although compared with a year earlier it increased by 1.1%.

The month-on-month fall was partly due to a 5% fall in oil and gas output during November because of maintenance work in the North Sea.

The narrower measure of manufacturing output rose by 0.7% compared with October, and was up 2.7% from November last year.

The ONS figures also showed that construction output shrank 2% in November compared with a month earlier., although it was up 3.6% from the same point a year earlier.

David Kern, chief economist at the British Chambers of Commerce said the figures were largely to be welcomed but he warned there was "no room for complacency".

He added: "The UK faces a national challenge when it comes to trading the world. The Monetary Policy Committee must persevere with low interest rates for most of this year and we need to redouble our efforts to place exports at the heart of businesses' growth strategy if we are to achieve the government's export target and rebalance the economy."

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