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Friday, 9 August, 2002, 11:46 GMT 12:46 UK
Export slide widens UK trade deficit
The trade gap was worse than expected
A big drop in exports widened the UK's trade gap in June, raising further doubts about the underlying strength of the economy.

Official figures showed that the global goods deficit increased to �3.05bn in June, from a revised �1.8bn gap the previous month.

The widening of gap reversed an improvement that had been seen in May's figures.

"The improvement we saw in May was always going to be too good to be sustained," said Ross Walker, an economist at the Royal Bank of Scotland.

"But the deterioration is far worse than we had been expecting."

Europe sluggish

Exports fell to �14.9bn from �17.1bn in May, while imports also fell to �17.95bn from �18.91bn.

The trade deficit with EU countries widened to �900m from �100m the previous month.

"The higher deficit with respect to the EU trade balance reflects the fact that domestic demand growth on the continent has been weak," said Philip Shaw at Investec Bank.

Special factors

Economists urged caution in drawing too many conclusions from the figures, saying they may have been distorted by the Jubilee bank holiday.

A similar argument was put forward for the UK manufacturing figures released on Monday, which showed that output fell in June by the biggest amount since 1979.

"I wouldn't read too much into this particular set of data, but other data does show the outlook for the global economy and UK exports is not as bright as previously thought," said Mike Taylor, economist at Merrill Lynch.

Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

07 Aug 02 | Business
01 Aug 02 | Business
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