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UK trade gap unexpectedly widens UK trade gap unexpectedly widens
(about 2 hours later)
The UK's goods trade deficit with the rest of the world unexpectedly widened to its biggest since August 2008 in January.The UK's goods trade deficit with the rest of the world unexpectedly widened to its biggest since August 2008 in January.
And exports saw their sharpest drop in more than three years, according to the Office for National Statistics (ONS).And exports saw their sharpest drop in more than three years, according to the Office for National Statistics (ONS).
The UK's trade gap in physical goods widened to £7.99bn ($12bn), well above the £7bn forecast by economists.The UK's trade gap in physical goods widened to £7.99bn ($12bn), well above the £7bn forecast by economists.
The news was disappointing especially since the weak pound might have been expected to boost sales abroad. The news was disappointing, especially since the weak pound might have been expected to boost sales abroad.
The UK's currency has fallen by some 24% against a basket of world currencies since early 2007 - before the global economic crisis.
For many countries, that means UK goods have become cheaper to buy.
Increased importsIncreased imports
Meanwhile, December's trade figure was revised down to £7bn from its original £7.3bn.Meanwhile, December's trade figure was revised down to £7bn from its original £7.3bn.
The goods trade gap with non-European Union countries was also wider than forecast.The goods trade gap with non-European Union countries was also wider than forecast.
That stood at £4.8bn, from £3.4bn in December, after exports to countries outside the EU dropped by 12.5% on the month and imports rose by 1.6%.That stood at £4.8bn, from £3.4bn in December, after exports to countries outside the EU dropped by 12.5% on the month and imports rose by 1.6%.
The ONS said there was no obvious reason for the deteriorating picture, although some have suggested that the particularly bad weather in January may have disrupted trade flows.The ONS said there was no obvious reason for the deteriorating picture, although some have suggested that the particularly bad weather in January may have disrupted trade flows.
'Disappointing''Disappointing'
The unexpected data took experts by surprise. The unexpected data came as a surprise - and a disappointment - to experts.
Jeremy Stretch, senior market strategist at Rabobank, said: "It could be that the weakening of sterling is taking time to feed through - but that may be painting too much of a positive on a negative set of numbers."
"It's a pretty disappointing number," said analyst Alan Clarke, of BNP Paribas."It's a pretty disappointing number," said analyst Alan Clarke, of BNP Paribas.
"Trade is one area where people have been expecting an improvement but it doesn't seem to be happening. In the big picture this is bad news for quarter one GDP.""Trade is one area where people have been expecting an improvement but it doesn't seem to be happening. In the big picture this is bad news for quarter one GDP."
And Simon Hayes at Barclays Capital said: "The trade data really is quite surprising. Weaker exports seems to have been behind January's decline." The pound weakened again on the news, dipping 0.4% to 1.10 euros at mid morning and losing 0.75% against the dollar to below $1.50.
But he said such a development was at odds with expectations, given the weakness of sterling.