Call to help exporters as UK trade gap hits �7.5bn
The UK's goods trade gap hit a disappointing £7.5 billion in March amid little sign of an export-led recovery, official figures showed today.
The deficit - well ahead of an upwardly-revised £6.3 billion for February - came as total imports surged £1.4 billion over the month compared with a meagre £200 million rise in exports.
Exports are sluggish despite the fastest monthly growth in nearly eight years from manufacturers over the month and a weak pound - dealing a blow to hopes that trade could help a still-fragile UK economy pull away from the impact of recession.
The figures showed export prices up 2.9% over the month, outstripping a 2.7% rise in import prices.
Vicky Redwood, of Capital Economics, said underlying export prices had risen 4.5% since November and added: "Exporters still seem to be using the lower pound to boost their export margins, rather than increase market share."
Excluding volatile items such as oil, export volumes actually fell 1.8% over the month, compared with a 3.5% rise in imports.
While Tuesday's manufacturing figures are expected to add around 0.1 percentage points to the UK's 0.2% overall growth in the first quarter, trade is still dragging back the performance of the economy.
Ms Redwood added: "The deficit in the first quarter as a whole was about £1 billion wider than in the final quarter of last year, suggesting that net trade is still failing to support the wider economic recovery."
The British Chambers of Commerce called for more support for exporters. Chief economist David Kern said: "Businesses urgently need short-term trade finance support, so that our exporters can get their goods and services out to the global market as the recovery continues.
"We must remember that business exports will be at the centre of any meaningful UK recovery over the next few years."
Over the first three months of 2010, total exports in goods were up 2.5% to £62.3 billion, although this was surpassed by a 2.8% rise in total goods imports to £84.1 billion.
The detailed figures showed exports to the United States down by £500 million in March, while imports from Germany rose by £300 million.
Experts also noted a widening goods trade gap of £3.5 billion with other European Union countries during the month, and warned that Greece's debt crisis could undermine hopes of recovery in a key export market for the UK.
"Recent events in the eurozone - the UK's biggest trading partner - clearly cast a shadow over the longer-term prospects for UK exporters," Ms Redwood added.