UK goods exports fell to their lowest level in four-and-a-half years in February as overseas manufacturing sales slumped, helping the overall trade deficit widen to a five-month high, official figures showed yesterday.
The Office for National Statistics (ONS) also revised an initial strong reading for January’s trade deficit to show it was much worse than previously thought.
It was the last set of official monthly trade data before the General Election and comes days after a report commissioned by Labour calling for a “revolution in export culture” to help British firms compete better in the global marketplace.
The figures echo a sharp drop in manufacturing export orders recently reported by the CBI, which warned that the strength of the pound was weighing on performance.
The data showed goods exports fell to £23.2bn in February, the lowest level since September 2010, mainly reflecting a fall in sales to the US. It took the goods deficit to £10.3bn, its highest since July last year.
Manufactured goods exports fell £1.1bn to £18.6bn. It was the lowest level since last August and the biggest drop since July 2013 – but this was offset by an uptick in fuel exports.
The overall deficit in February – including the impact of a surplus in the services sector – stood at £2.9bn. That was the highest level since last September.
It was a sharp increase from January’s £1.5bn – though this figure was itself revised up from an estimate of £600m.
For the three months to February the goods deficit with the EU, Britain’s biggest trading partner, reached a record high of £21.1bn.
The figures are likely to add to concerns about the need to re-balance the economy away from its reliance on domestic consumer spending.
The Bank of England this week warned that the scale of the current account deficit could pose a risk of investors turning against the UK.
Paul Hollingsworth, of consultancy Capital Economics, said: “February’s trade deficit came in worse than expected and will have re-ignited fears that the strong pound and weakness in demand in the eurozone is acting as a straitjacket on exporters.”
Chris Williamson, chief economist at Markit, said: “The strong exchange rate and weaker growth in the US appear to have hampered overseas sales.”