The UK’s trade deficit widened to £13.3bn in the first quarter, the worst result since the financial crisis in 2008, despite a narrowing in the gap between Britain’s imports and exports during March.
In the latest sign of weakness in the UK economy, the total trade deficit for goods and services widened by £1.1bn between January and March compared to the fourth quarter of 2015.
Britain’s goods deficit with the European Union rose to the widest on record. It widened by £0.7bn to £23.9bn during the first quarter as exports rose 1.6 per cent but this was outpaced by a bigger 2.3 per cent increase in imports.
The poor first quarter numbers come despite a decent month in March, when the total trade deficit for goods and services narrowed by £500m to £3.8bn. Economists had expected a reduction between February and March but had forecast a higher deficit of £4.2bn.
Howard Archer, chief European & UK economist at IHS Economics, called the first quarter numbers “truly horrible”, adding:
It is evident that negative net trade was a factor limiting UK GDP growth to 0.4% quarter-on-quarter in the first quarter – furthermore, this will have been a third successive quarter that negative net trade held back GDP growth.The increased first quarter total trade deficit does not bode well for the first quarter current account deficit. This reached an eye wateringly large £32.7 billion (7.1% of GDP) in the fourth quarter of 2015 as it was lifted by a sharp jump in the shortfall in the UK’s net primary income account as well as in increased total trade deficit.