UK trade deficit narrows more than expected in April, ONS reveals

Britain's trade deficit narrowed more than expected in April as exports on goods surged, official data showed on Thursday.

The Office for National Statistics said the total trade deficit fell to £3.29bn in April from a downwardly revised £3.53bn in March. It marked the lowest deficit since September and was better than the £3.55bn predicted by economists.

The deficit in goods alone dropped to £10.52bn in April from £10.64bn a month ago. Economists had forecast a deficit of £11.0bn, broadly in line with the initial March estimate.

Goods export volumes jumped by £2.2bn in April on the month to £26.1bn, the biggest rise since records started in 1998. Imports increased £2bn to £36.6bn.

In the three months to April, the total trade deficit for goods and services narrowed by £2.1bn to £11.3bn. The deficit on trade in goods narrowed by £1.5bn to £32.6bn as exports gained by £4.4bn and imports rose by £2.9bn.

ONS said the increase in exports was driven by increases in chemicals, oil, machinery and aircraft.

Dennis de Jong, managing director of UFX.com, said even though the data beat expectations the extent of Britain’s trade deficit will "not make welcome reading for Chancellor George Osborne ahead of what promises to be the most significant month of his time in Number 10".

“With the EU referendum on the horizon, both the Leave and Remain camps will likely look to twist this data to their own ends. Leave will argue the deficit is all the more reason for Britain to focus on trade relationships beyond Europe, while Remain will caution against the damage a Brexit could do to a trade deficit which is already causing concern," he said.

“Whichever way the June 23 vote goes, Osborne faces a significant challenge to balance Britain’s trade in the face of weakening global demand and financial uncertainty.”