Official figures released on Friday showed a trading deficit for goods and services of £34.8bn in 2014. This will make disappointing reading for the Conservative party seeking to capitalise on its economic record ahead of May’s election, as the trade deficit last year was the widest since the coalition came to power.
Despite the promise to revive manufacturing and raise exports, the trade deficit last year was the widest since 2010 as exports fell faster than imports.
Fresh calls for export support from the British Chambers of Commerce immediately followed. The business lobby group’s chief economist, David Kern, commented: “We are clearly not making adequate progress in rebalancing our economy, and the weakening of the eurozone is creating problems for our exporters. Much greater efforts are needed to develop a national strategy for boosting exports, with improved access to finance for growing firms.”
For December alone, a surge in imports of cheap oil meant the year ended on a weak note for trade. Goods exports barely increased while imports jumped, leaving the trade gap much bigger than economists had been expecting. The deficit on goods widened to £10.2bn in December from £9.3bn in November, worse than the £9.1bn gap economists had forecast in a Reuters poll.
The widening came as goods exports rose by less than £0.1bn with imports rising £0.9bn – £0.7bn of which was fuel imports, mostly from Norway. The volume of oil imports reached its highest level since July 2008, growing 37.5% between November and December, the Office for National Statistics said.
Analysts warned against reading too much into the monthly figures, which are typically unstable and in December were distorted by oil, which has more than halved in price since a peak last summer. Over the final three months of 2014 the deficit narrowed by the biggest amount for three years, raising hopes trade will have helped boost wider economic growth in the closing quarter, analysts noted.
While doing the forecast for this year, economists said exports would be pressured by a stronger pound and a slowdown in important markets, especially the UK’s main trading partner, the eurozone.
