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Britain's trade deficit widens (AP)

Tue, 09 Mar 2010 10:43:34 GMT

LONDON – Britain's trade deficit with the rest of the world widened unexpectedly in January after lower sales of chemicals and other commodities led a drop in exports.

The trade gap in physical goods widened to 7.99 billion pounds ($12 billion), well above the 7 billion pounds forecast by analysts, according to figures from the Office for National Statistics.

The figures were a disappointment given that economists had expected recent weakness in the British pound to boost exports.

The British currency dropped further after the trade report. It was 0.7 percent lower at $1.4957 midmorning in London.

The statistics office said there was no obvious reason for the wider deficit, although some have suggested that the particularly bad weather in January may have disrupted trade flows.

Imports fell 1.6 percent and exports dropped 6.9 percent, the sharpest decline in more than three years.

Hetal Mehta, Senior Economic Advisor to the Ernst & Young ITEM Club economic consultancy, cautioned against reading too much into one month's data.

"With sterling persistently weak and not expected to appreciate markedly in the coming months, U.K. exporters should be able to take advantage of the boost to competitiveness and the pick up in the U.S. and Asian economies," Mehta said.

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Britain's trade deficit widens (AP)

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