Business

UK trade deficit worse than expected in February

north sea oil rig platforms Image copyright Getty Images
Image caption A fall in oil exports was one factor behind the weaker trade figures

The UK trade deficit widened in February by more than expected, figures from the Office for National Statistics (ONS) show.

The trade deficit in goods and services worsened to £2.86bn from £1.54bn in January, the ONS said.

The deficit in goods was £10.34bn, up from £9.17bn in January, which was partly offset by a surplus of £7.5bn on services.

Goods exports were £23.16bn, the lowest total since September 2010.

That drop was largely thanks to weaker sales to the US.

For the three months to the end of February, the ONS said exports to the European Union were at their lowest since records began in 1998, leaving the EU goods deficit at a record high of £21.1bn, thanks particularly to a fall in oil exports.

UK trade figures show the extent of import and export activity. The figures could add to concerns that the UK economy remains too dependent on consumer spending, which accounts for more than 70% of economic activity.

Howard Archer, chief UK economist at IHS Global Insight, said: "The trade data are undeniably disappointing and deal a significant blow to hopes that net trade helped UK GDP growth in the first quarter."

However, he said trade was likely to improve in the coming months: "While UK GDP growth will likely remain largely reliant on domestic demand, it is realistic to hope that exports will increasingly benefit as 2015 progresses from a significant pick-up in eurozone growth."

David Kern, chief economist of the British Chambers of Commerce said: "Unless we see firm action to improve our export performance, it is not clear how we will sustain strong growth in the long-term.

"The UK's trade deficit with the EU reached a record high in the last three months, and while the EU is our largest trading partner, it is vital that we capture more of the export market in the fast growing economies beyond Europe."

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