Trade deficit at record high in December

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Britain’s goods trade deficit hit a record high in December as imports of aircraft jumped ahead of a change in VAT sales tax, and bad weather caused disruption at airports and ports.

The figures chime with a sharp fall in gross domestic product at the end of 2010 and may raise concern among economists that Britain’s recovery will not be as swift as hoped.

The Office for National Statistics said that Britain’s goods trade gap widened to £9.247bn from £8.460bn in November.

Economists had forecast a broadly steady reading of £8.6bn.

December was Britain’s coldest in at least 100 years and heavy snow and ice closed many airports, though the ONS said they may have recovered some business later in the month.

Even excluding volatile trade in oil and goods such as aircraft, Britain’s goods trade deficit rose to £8.175bn from £7.382bn, also its highest since records began.

The total trade deficit, which includes services, deteriorated to its worst since August 2005, increasing to £4.831bn from £3.947bn.

Economist David Tinsley at NAB, which owns Yorkshire Bank, said: “The headline data is disappointing, but the impact of the weather really was always going to make it very hard to discern the underlying trend. So while they’re somewhat disappointing I would leave them aside until we get the January figures and can assess whether there has been a bounce back in some of the issues.”