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Demand slump cuts trade gap to £7.4bn
Hugo Duncan10 Feb 2009
The UK trade deficit with the rest of the world fell to an 18-month low in December as a slump in domestic demand led to a collapse in imports.
Official figures show the trade gap - the difference between goods sold overseas and those bought into the country - fell to £7.4 billion at the end of 2008 from a record £8.1 billion in November.
It was the narrowest trade gap since June 2007 but came from a sharp fall in imports rather than a significant rise in exports. Imports fell by £7 million while exports rose less than £1 million.
David Page of Investec said the narrowing trade gap is "encouraging". However, Vicky Redwood of Capital Economics warned: "This is unlikely to mark a turning-point for the economy.
"The narrowing in the trade deficit was primarily due to a drop in imports, and was therefore a reflection of the weakness of domestic demand.
"We continue to think that the lower pound will only provide a significant boost to exports once global demand starts to recover."
