Britain’s trade deficit narrowed less than expected in March as a weak eurozone economy hit UK exports.
The March data suggests trade was a drag on GDP in the first quarter and not a boost as it was in the last three months of 2014.
The gap between goods exports and imports fell to £10.1bn in March from £10.8bn in February, according to the Office for National Statistics, but economists had forecast a bigger drop to £9.8bn.
Vicky Redwood, chief UK economist at Capital Economics, described the latest trade figures as “fairly unimpressive”.
Exports of British goods to the eurozone – the UK’s largest trading partner – dropped 2.9% over the month in March, and 8.1% over the first quarter.
The broader trade in goods and services deficit widened to £7.5bn in the first three months of the year, from £6bn in the fourth quarter, highlighting that the government’s ambitions to rebalance the economy away from consumer spending at home and towards more exports have so far failed.
Redwood said: “Survey measures of export orders do not paint a particularly encouraging picture of the near-term outlook for exports. Indeed, the weak eurozone and strength of the pound are likely to hamper the UK’s export outlook for the foreseeable future.”
Britain’s recovery slowed sharply in the first quarter, with growth halving to just 0.3% and heavily reliant on the consumer, with the services industry the only major sector of the economy where output grew. The trade data will be included in the second estimate of GDP later this month.
Howard Archer, chief UK economist at IHS Global Insight, said: “While UK GDP growth will likely remain largely reliant on domestic demand, the hope is that exports will ultimately benefit over the coming months from a marked pickup in eurozone growth. However, the strength of the pound against the euro threatens to dilute the upside for UK manufacturing exports to the eurozone.
“The relatively disappointing export data will put pressure on the new Conservative government to provide as much support as possible to exporters.”
Goods exports rose by £300m to £23.7bn in March, boosted in particular by materials and chemicals. Imports on the other hand fell by £400m to £33.9bn, reflecting a fall in machinery and transport equipment imports, mainly trade in aircraft and ships.
