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UK goods trade gap biggest on record UK goods trade gap biggest on record
(35 minutes later)
The UK's goods trade gap with the rest of the world widened by £1.9bn to a record high of £125bn in 2015, official figures show.The UK's goods trade gap with the rest of the world widened by £1.9bn to a record high of £125bn in 2015, official figures show.
The Office for National Statistics also warned the latest figures would have a negative impact on its second estimate of fourth-quarter economic growth.The Office for National Statistics also warned the latest figures would have a negative impact on its second estimate of fourth-quarter economic growth.
But 2015 also saw a record surplus in the UK's dominant services sector of £90bn.But 2015 also saw a record surplus in the UK's dominant services sector of £90bn.
That meant the UK's total trade gap widened by just £300m last year.That meant the UK's total trade gap widened by just £300m last year.
The overall deficit - the difference between the amount the UK imports and what it exports - stood at £34.7bn in 2015, the ONS said.The overall deficit - the difference between the amount the UK imports and what it exports - stood at £34.7bn in 2015, the ONS said.
It will publish its second estimate of fourth-quarter economic growth on 25 February.It will publish its second estimate of fourth-quarter economic growth on 25 February.
The figures also contained December's trade data, which showed the deficit narrowed by £1.3bn to £2,7bn overall in the month.The figures also contained December's trade data, which showed the deficit narrowed by £1.3bn to £2,7bn overall in the month.
The goods deficit fell to £9.9bn from £11.5bn in November, but that was thanks to a fall in imports of £1.7bn in December rather than an increase in exports.The goods deficit fell to £9.9bn from £11.5bn in November, but that was thanks to a fall in imports of £1.7bn in December rather than an increase in exports.
Part of the fall was accounted for by falling oil prices, which meant the cost of oil imports fell in value to their lowest level since February 2009. A large part of the fall was however accounted for by depressed oil prices, which meant the cost of oil imports fell in value terms to their lowest level since February 2009.
In three months to the end of December, the UK's trade deficit stood at £10.4bn, compared with £8.6bn in the three months to the end of September.In three months to the end of December, the UK's trade deficit stood at £10.4bn, compared with £8.6bn in the three months to the end of September.
The UK also suffered a record traded goods deficit of £23.2bn with the rest of the European Union in the fourth quarter of 2015, as exports to other EU countries fell 0.5% and imports from the EU rose 2.7%
The trade deficit is one of the factors cited by analysts as a drag on UK economic growth, which has been exacerbated by the strengthening pound over the past few years.The trade deficit is one of the factors cited by analysts as a drag on UK economic growth, which has been exacerbated by the strengthening pound over the past few years.
'Dangerous cocktail'
A stronger pound makes UK exports more expensive for overseas customers.A stronger pound makes UK exports more expensive for overseas customers.
The UK's overall trade deficit took its toll on growth in the third quarter of 2015, contributing to disappointing economic growth of 0.4%.
Chancellor George Osborne has warned that the economy is facing a "dangerous cocktail" of risks in 2016, ranging from slowing global economic growth to volatile stock markets and the continuing slump in oil prices.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the latest trade figures pointed to a 0.2 percentage point reduction in the 0.5% first estimate of economic growth in the fourth quarter when the ONS publishes its second estimate.
"With global trade flows slowing and UK goods still uncompetitive despite sterling's depreciation since December, we expect a poor trade performance to continue to impede the economic recovery this year, " he said.
Paul Hollingsworth, UK economist at Capital Economics, said he believed concerns about a sharp global slowdown were "somewhat overdone".
But he added: "Nonetheless, any progress in reducing the trade deficit is likely to be extremely slow in the near term, leaving the [UK] recovery reliant on domestic demand."