UK Trade Gap Widens
Tuesday, January 13, 2009 7:40
As a slump in sales of to the US dashed hopes that the weak pound would help protect exporters from the full effects of the global economic downturn, UK’s trade deficit rose to a record level in November.
Due to the recession, the sales to the US dropped by 21% while exports to Japan fell by 11%. The goods trade gap between UK and non-European Union countries also hit a record, growing from £4.4 billion to £5.3 billion. As a result, along with the fall in export earnings, the trade gap further widened from £7.6 billion in October, then to £8.3 billion in November.
Today’s figure is far above the expectation by analysts in November and prompted an immediate fall in the value of sterling, which hit almost $1.46 after the Office of National Statistics published its report.
The British Chambers of Commerce announced today that it expected GDP to have fallen by 1.2 % in the last three months of 2008, marking the second consecutive quarterly fall in output. Some economists even expect GDP to fall by even more, dipping by as much as 1.5% over the quarter.
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