Poor trade data point to longer recession

By Michael Millar

Date: Friday 15 Jun 2012

Economists said poor UK trade and construction figures out on Friday would dampen any positive mood left over after the government unveiled plans to boost business lending.

The UK's overall trade deficit widened from £3bn to £4.4bn in April, with the goods deficit widening from £8.7bn to £10.1bn, the largest in 7 months.

While the deficit with the EU increased, the main deterioration was outside the EU due to a plunge in exports.

Exported goods volumes to all areas fell by 7.7% month-on-month, according to the figures from the Office for National Statistics.

Dr Howard Archer, Chief UK Economist at IHS, said the April trade data reinforced doubts as to whether the UK could achieve a sustained improved export performance any time soon.

Re-orientating the economy towards exporting is seen by many as a key aspect of securing future economic stability for the UK.

"Of particular concern to UK exporters is likely very weak overall economic activity in the Eurozone for some time to come," Archer said.

"Furthermore, events in Greece and Spain are currently heightening the downside risk to the Eurozone economic outlook."

April brought yet more bad news in the form of construction output, which showed a 13.3% month-on-month drop and an 8.5% year-on-year drop.

The quarter-on-quarter fall in construction output in the first quarter was also revised down to -4.9% from -4.8%.

Friday's poor figures follow hot on the heels of downbeat industrial and manufacturing figures, increasing the chance of the UK having remained in recession in the second quarter of 2012.

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