UK trade deficit widens more than expected in April

A North Sea oil rig Image copyright PA
Image caption A miscalculation by HM Revenue & Customs meant £700m of oil exports to the EU were not counted in April's trade figures

The UK's trade deficit with the rest of the world widened by more than expected in April, because of weaker manufacturing exports, official data showed on Friday.

The Office for National Statistics (ONS) said the UK's goods trade deficit grew to an estimated £9.6bn, from £8.3bn in March.

But that was offset by a £7.1bn trade surplus in the UK's dominant services sector.

That left an overall deficit of £2.5bn.

The ONS said its figures were an estimate due to an omission in its original calculations, which overlooked around £700m of oil exports to the European Union.

The ONS said the omission was not spotted in time by tax officials to be included in a detailed breakdown of the trade figures.

Analysis - Jonty Bloom, BBC business correspondent

The UK's trade deficit has got much worse in April. Or did it?

According to the latest figures, in April we imported £2.5bn worth more of goods and services than we managed to export, a huge leap in the deficit.

Except for the fact that Her Majesty's Revenue and Customs (the taxman to you and me) seems to have missed £700m of oil exports to the EU.

The mistake was spotted too late to include in these figures and we will have to wait another month to get the correct picture.

Without this "omission", the trade deficit would have been £1.8bn, still much higher than the £1.1bn deficit in March, as exports have dropped and imports increased.

Had those oil exports been included, the goods trade deficit would have been £8.9bn.

But the deficit was still larger than expected. Economists had forecast a deficit of £8.6bn in April.

Weak demand

Goods exports in April fell by 1.5 % to £24.1bn, when the oil omission was taken into account. while imports rose 0.8% to just over £33bn.

Weak demand in the eurozone - the UK's largest trading partner - has hampered the government's efforts to rebalance the economy to support greater manufacturing and more exports.

At present, the services sector contributes nearly 80% to overall economic growth.

Exports to the European Union (EU) as a whole rose 1.3% to £12.4bn, but the deficit with the bloc widened to £5.1bn, from £4.8bn a month earlier.

The goods trade deficit with non-EU countries grew to £3.7bn in April from £3.4bn in March, against forecasts for a gap of £3.1bn.

Howard Archer, chief UK and European economist at IHS Global Insight, said the data indicated that net trade was "unlikely to make a significant positive contribution to UK growth in the near term".

He added that imports were likely to increase as a result of healthy UK domestic demand.

"The export performance in April looks lacklustre, even allowing for the underestimation of oil exports by £700m," he said.

"Even so, the upside for UK exports may well be limited by only gradual improvement in eurozone domestic demand, while the strength of the pound could become an increasing problem for UK exporters."

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