Weak demand from Europe hits exports

EXPORTS of British goods have crashed to the lowest level for more than three years amid weak demand from Europe, according to the latest figures.

The Office for National Statistics said sales of goods stamped ‘Made in Britain’ fell 1.6pc in February to £23.5bn – the lowest level since November 2010.

But overseas demand for British services – from accountancy and law to marketing and IT – is booming with exports topping a hitherto unseen £17bn for a fourth month in a row.

The overall trade deficit – exports minus imports – narrowed from £2.2bn in January to £2.1bn in February as the goods shortfall of £9.1bn was partly offset by a £7bn surplus in services.

The slump in goods exports underlines concerns about the sustainability of a recovery built on consumer spending and the housing market, although manufacturing and business investment have picked up in recent months.

In the Budget l ast month, George Osborne conceded Britain does not ‘invest enough, export enough or save enough’.

The ONS said exports of British goods to the EU fell 2.8pc to £11.7bn in February – the lowest l evel since September 2010. Exports to the rest of the world were also down, but only by 0.4pc to £11.9bn, the worst performance since July last year.

It is feared the recent strength of sterling – the pound is up 13pc against the dollar since July and 6pc against the euro – will further depress demand for goods abroad.

Strong domestic demand has boosted British manufacturers with profitability in the sector at its highest level since the Great Recession struck in early 2008, according to the ONS.

But Rob Wood, chief UK economist at Berenberg Bank, said: ‘We do not make enough things that other countries want to buy.’