Deficit narrows but trade lacklustre

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BRITAIN’S goods deficit narrowed slightly in November but held above its average for the past year, raising the chance that trade activity in the last three months of 2012 dragged on economic growth.

The Office for National Statistics said that the goods trade gap shrank slightly less than expected to £9.164bn from October’s £9.487bn, as exports rose faster than imports.

The overall trade deficit – including Britain’s customary surplus in services – shrank modestly to £3.466bn.

“I suspect what the figures confirm is that trade will act as a drag on the fourth quarter GDP numbers,” said Peter Dixon, economist at Commerzbank.

“Uncertainty around the eurozone debt crisis has not only hampered UK exports, but there is also some evidence that UK firms have turned down business in parts of the eurozone due to credit risk.”

But suggestions the data offers further evidence that the UK economy continues to struggle look unlikely to persuade the Bank of England to extend its stimulus programme at its policy meeting today.

Goods imports from the European Union, Britain’s main trading partner, jumped to their highest by value since May 2006 in November, driven by chemicals and cars. The trade showing further afield was equally lacklustre.

The goods trade deficit with non-EU countries unexpectedly widened to £4.519bn from £4.502bn in October.