Britain's trade deficit worst since 1697

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Trade gap widens to record deficit Economists expressed concern over the data, though they have failed to budge financial markets Britain's trade deficit with the rest of the world widened in March to £2.9 billion - and the shortfall for the first quarter of this year is the worst since counting first started in 1697.

Stripping out oil and erratic items, the monthly goods trade deficit of £3.36 billion in March was the worst figure since those records began in 1980.

The figures highlight the pressure Britain's manufacturing sector is under because of the strong pound and tough world markets, particularly in the US. Meanwhile, strong domestic demand is sucking in imports.

The trade gap for the first three months was £7.7 billion - up from £7.6 billion for the same period last year - and the March figure marked a £600 million deterioration from February.

But a surplus on services of £800 million meant that the the UK's total deficit was £2.1 billion in March.

Income from services usually contributes upwards of £800 million per month and in the first quarter the total was £2.5 billion.

Economists expressed concern over the data, though they have failed to budge financial markets.

Mark Miller at Morgan Stanley Dean Witter said: "We would certainly see the main part of the downturn in the UK economy this year coming from net trade.

"We would expect it to shave almost a full percentage point off gross domestic product growth this year.

"I think the Bank of England has acted pre-emptively so far by cutting rates by 75 basis points.

"To that extent they have already done what they can for manufacturers, bearing in mind the domestic economy is bearing up quite well."

http://itn.co.uk/news/20010521/business/13trade.shtml

-- Martin Thompson (mthom1927@aol.com), May 21, 2001


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