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UK trade deficit widens in Dec as cheap oil imports surge

Friday, February 6, 2015 - 17:50

[LONDON] Britain's goods deficit widened much more than expected in December as imports of cheaper oil surged, official data showed on Friday.

However, the goods deficit in the fourth quarter of 2014 narrowed by the largest amount in three years.

An Office for National Statistics official said she expected trade to make an improved contribution to Britain's gross domestic product in the final three months of 2014, compared with a 0.2 percentage point drag in the third quarter.

The ONS said the trade in goods deficit grew to 10.154 billion pounds from 9.283 billion pounds in November.

Economists had forecast a gap of 9.1 billion pounds in December.

Exports in the month edged up 0.1 per cent while imports jumped by 2.7 per cent, pushed up by a nearly 40 per cent leap in the volume of oil imports on the month, reversing a trend of falling oil imports in previous months.

An ONS official said much of the oil imports came from Norway.

The data meant that in the fourth quarter as a whole, Britain's deficit in its trade in goods shrank to 29.4 billion pounds, down by 2.2 billion pounds from the third quarter.

Britain has relied on domestic demand to propel its economic recovery since the middle of 2013.

With three months before the next national election, the government's plan to focus the economy more on exports looks unlikely to come to fruition, hampered by a sharp slowdown in the eurozone in recent months.

British manufacturing export order growth hit a five-month high in January, according to a survey of British manufacturers on Monday.

Oil prices have risen in recent days after falling more than 50 per cent from their highs of June last year. Traders and analysts say the prospect of a further, sustained rally from near six-year lows looks weak.

Including Britain's surplus in trade in services, the overall trade deficit widened in December to 2.895 billion pounds, the biggest since last July.

REUTERS