UK trade deficit jumps in March, ONS says

The UK’s trade with the rest of the world worsened in February by the most since January 2014.

The total international trade balance, which includes trade in both goods and services, was negative to the tune of -£2.9bn, versus the prior month’s tally of -£1.5bn and -£3.1bn in the same month of 2014, according to the Office for National Statistics (ONS).

That was mainly the result of the worsening in Britain’s overseas trade in goods to non-EU countries, especially the US. The so-called visible trade balance fell to -£10.34bn from an upwardly revised gap of -£9.174bn in the month before.

The size of January’s shortfall in the visible trade balance had originally been estimated at -£8.4bn.

Sales of goods abroad decreased by £900m to £23.2bn, a September 2010 low, led by a £1.1bn drop in exports of manufactured goods. Imports of goods rose by £0.3bn.

Trade in services registered a surplus of £7.5bn, only marginally below January’s tally of £7.6bn.

Total exports of goods and services increased by £1bn to reach £41.3bn, while imports did so by £0.3bn to hit £44.2bn.

Underlying improvement still evident, economist says

Commenting on the numbers, Dr.Howard Archer chief UK+European economist at IHS Global Insight, pointed out how despite February's renewed 6.6% drop in exports to non-EU countries, export volumes of traded goods exports excluding oil and erratics were still up by 2.4% in the three months to February compared to the three months to November and were up by 5.7% on the three months to February 2014.

"Meanwhile, the downward pressure on inflation coming from sharply lower oil and import prices was highlighted by import prices for traded goods falling 1.3% month-on-month and 6.4% year-on-year in February. This reinforces suspicion that the UK is likely to briefly experience mild deflation, and this could well have started in March," Dr.Archer added.