10 March 2010 | Jake Kanter
UK exports dropped at their fastest rate in more than three years, widening the trade gap.
Research by the Office for National Statistics (ONS) found that exports of goods fell by £1.4 billion to £19.5 billion in January. This was the largest monthly decline since July 2006 as demand for capital products, cars and chemicals all fell.
It meant the UK’s trade deficit (the amount that the value of imports exceeds the value of exports) hit £3.8 billion in January, compared with £2.6 billion the month before.
The figures cast doubt over the strength of the UK’s economic recovery. Liberal Democrat economic spokesman Vince Cable said they were “deeply alarming” and pointed to the “long-term decline and neglect” of British manufacturing.
“It is wrong to suggest that the British economy can escape from this recession by just relying on exports. It just isn’t happening. Exports are one modest part of the national economy. We need an economy that is strong and secure across the board,” he said.
But trade minister Lord Davies of Abersoch said the monthly ONS figures do not paint the whole picture. He explained: “The overall long-term export figures are good, with exports rising by £2.6 billion to £60.3 billion in the last quarter.”
The latest CIPS/Markit Manufacturing Purchasing Managers' Index – one of the indicators used by the Bank of England to examine the health of the economy – painted a different picture for February. It found activity in UK manufacturing remained strong last month as output rose to a high not seen in almost 14 years.
Meanwhile, Chinese exports continued to strengthen. Figures today showed that outgoing trade increased 45.7 per cent to $94.52 billion (£63.39 billion) – pointing to a rebound in global demand.