Oil fall aids trade deficit dip

THE tumbling oil price has driven down Britain’s enormous trade deficit with the rest of the world, figures showed yesterday.

The Office for National Statistics said the deficit in the trade of goods – what the UK exports minus what it imports – fell from £10.5bn in September to £9.6bn in October.

The improvement came as imports of oil decreased by £717m to £3.5bn.

North Sea platforms came back on line, cutting the need for the UK to buy energy from overseas, while lower oil prices helped as the UK imports more oil than it exports.

The oil price has slumped by nearly 45pc since trading at $115 a barrel in June and yesterday fell below $65 for the first time since 2009. But the underlying picture was little improved, with the trade deficit excluding oil down by just £167m to £8.8bn.

Rob Wood, UK economist at Berenberg Bank, said Britain’s trading situation remains ‘dreadful’ and added that the improvement ‘is nothing to crow about’.

Exports of goods increased by £211m or 0.9pc in October to £24.3bn with sales to the EU up £131m to £12.2bn and sales to the rest of the world up £80m to £12.1bn.

At the same time, imports fell by £675m or 1.9pc to just under £33.9bn.

Maeve Johnston, UK economist at Capital Economics, said: ‘Exporters are likely to continue to struggle with the strong pound and weakness in the eurozone over the coming months. But there are reasons to be optimistic about the medium term outlook.

‘Exports remain fairly competitively priced in foreign currency terms and exporters are increasingly turning to faster-growing non-EU markets to boost sales.’