Fall in UK trade gap fuels recovery hopes

The UK's trade gap with the rest of the world narrowed by more than expected in November on the back of a small rise in exports, fuelling beliefs that the economy emerged from recession at the end of 2009. The Office for National Statistics (ONS) said today that Britain's global goods trade deficit was £6.8bn in November, down from £7bn in October, after imports fell 0.8% and exports rose 0.1%. Economists had expected November's deficit to be £7bn. Hetal Mehta, senior economic adviser to the Ernst & Young Item club, said: "The small rise in exports, paired with a decline in imports in November, reflects improved trading conditions for the UK and should help push GDP into robust positive territory. With a global recovery in trade under way, the weakness of sterling will give a further boost to net exports over the coming year." But many economists believe that the much-needed rebalancing of the UK economy is not proceeding quickly enough. David Kern, chief economist at the British Chambers of Commerce (BCC), said: "Given the favourable global background for British exporters – with a competitive sterling exchange rate and robust growth returning in our key trading partners – our overall trading performance is still weak. "To strengthen Britain's global position, the government must support our exporters more effectively, as many other countries are doing, and it must reinforce measures aimed at ensuring that sufficient trade finance and insurance are readily available." The deficit on trade in goods with non-EU countries narrowed to £3bn, compared with £3.5bn in October. This was the narrowest gap since November 2005. Meanwhile, the goods trade gap with the EU – Britain's biggest trading partner – was its largest since January 2008 at £3.8bn.