Britain’s trade deficit surged to £4.1bn in October as imports rose to their highest level for nearly a year, according to official figures.
The Office for National Statistics (ONS) said the total trade deficit for goods and services widened by a higher-than-expected £3.1bn between September and October, with the strong pound and global economic slowdown hitting demand for exported goods. It added that the deficit for goods alone ballooned to £11.8bn from £8.8bn in September.
With oil and other volatile goods stripped out, the deficit was the biggest since ONS records began.
The figures highlight the UK’s reliance on domestic demand to drive growth, with economists concerned that too much of the economy is dependent on consumer spending fuelled by borrowing.
While the monthly figures can be highly volatile, the three month data to October also showed the scale of the challenge in closing the trade gap, with the deficit on trade in goods and services estimated at £8.4bn – up by £2.4bn from the three months to July.
The British Chambers of Commerce (BCC) warned the deficit could prove a drag on UK growth in the fourth quarter.
Howard Archer, the chief UK & European economist at IHS Global Insight, said: “More highly unappetising and worrying news on the trade front – with October’s deficit sharply up as exports fell and imports surged.
“The trade data are notoriously volatile but the extent of October’s shortfall means that net trade is very likely to hold back GDP growth appreciably again in the fourth quarter – after it was a record drag on GDP growth in the third quarter.”
Mr Archer said that UK exports have “clearly been struggling markedly in recent months”, due to sterling’s strength, particularly against the euro, and muted global demand.
He added: “A modicum of relief for exporters has come from the pound coming slightly off its highs against the euro after the ECB delivered less stimulus than expected at its December 3 policy meeting.”