The trade in goods deficit widened to a worse than expected £9.8bn in January from £7.7bn in December
Britain's trade position worsened in January, as diminishing demand for British goods abroad triggered a fall in exports.
The trade in goods deficit – exports minus imports – widened to a worse than expected £9.8bn in January from £7.7bn in December, according to the Office for National Statistics.
The government's ambitions to rebalance the economy away from debt-fuelled spending and towards exports were disappointed by a 4% fall in exports in January to £24.2bn. Imports however increased by 3.4% to £34bn, as an improved economic backdrop boosted domestic demand for foreign goods.
"January's trade figures continue the disappointing run of news on the UK's export performance," said Samuel Tombs, UK economist at Capital Economics. He said the fall in exports might partly be explained by the recent strengthening of the pound, with a risk it was starting to have an adverse effect on the UK's economic recovery.
He added: "With demand from the UK's main trading partners in the eurozone unlikely to rise significantly soon, we continue to think that the UK's economic recovery will receive little in the way of support from the external sector this year."
Part of the weakness in the UK's trade position in January could be explained by distortions of erratic items, in particular strong imports of aircraft.
While imports from the European Union – Britain's biggest trading partner – were flat at £18bn, imports from outside the EU jumped 7.5% to £16bn in January.
Goods exports to the EU fell by 3.7% to £12.2bn, while exports to non-EU countries fell more sharply by 4.3% to £12.1bn.
The broader trade in goods and services also widened sharply to £2.6bn in January from £700m in December.
In 2012 the chancellor, George Osborne, set a target of doubling UK exports to £1 trillion by 2020. However, UK exports have remained flat since mid 2011 according to the ONS, reflecting continuing difficulties in many economies as the impact of the global financial crisis is still felt.
Brighter news on the UK economy came from the construction industry, with separate data from the ONS showing output in the sector rose by a better than expected 1.8% in January compared with a year earlier.
Rob Wood, chief UK economist at Berenberg, said that taken together the trade and construction data suggested the growth in the first quarter of 2014 would be reliant on domestic activity.
"The UK economy is heading for another strong domestically driven quarter of growth in early 2014, that will drag in imports and may worsen the sizeable trade deficit. Stimulated by booming house prices, and showing little ill effect from the weather, construction output rose 1.8% month on month in January."