UK trade deficit widens to worst in 17 months

1 min Read Published: 09 Mar 2010

The UK's goods trade deficit with the rest of the world unexpectedly widened to its biggest since August 2008 in January. And exports saw their sharpest drop in more than three years, according to the Office for National Statistics (ONS).

So why is the news of an increased trade deficit disapointing? Here's why in 77 words:

  • The Bank of England is hoping that a weak currency will boost exports. In fact exports have declined.
  • A positive net trade could help boost growth in the economy especially as domestic demand remains muted due to high household debt levels and public sector cut backs.
  • Over reliance on imports while the pound weakens will mean that we could end up importing inflation (i.e having to import more from abroad at an increasing cost).