Growing trade deficit raises downturn fears

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BRITAIN’s goods trade deficit widened in September to its highest since the series began in 1998 after a record rise in imports, official data showed. The Office for National Statistics said that Britain’s goods trade deficit widened to £9.814bn in September from an upwardly revised £8.617bn in August.

Economists had been forecasting a much smaller widening in the deficit to £8bn.

Policymakers have long hoped that manufacturing will help drive the recovery, but output growth has been hit by falling demand for exports.

At the same time, cash-strapped consumers are increasingly reining in spending, which is damaging domestic demand.

Coupled with falling employment and a sharp slowdown in shop price inflation, the record trade deficit reinforced fears that Britain is fast heading for another downturn as the eurozone debt crisis escalates.

Economists said the numbers were a further sign that the crisis in the eurozone had dampened Britain’s exports, and cautioned against interpreting any surge in imports as a harbinger of recovering domestic demand.

The welter of gloomy news is piling pressure on finance minister George Osborne to come up with a plan to boost growth when he delivers his autumn budget statement to parliament later this month, although he has already ruled out easing the pace of austerity measures.