The British goods trade deficit with the rest of the world widened unexpectedly in May to its second highest on record, according to data released today.
The Office for National Statistics (ONS) said the goods trade gap widened to £6.753 billion in May from a downwardly revised £5.568 billion in April. Economists had forecast a deficit of £5.7 billion.
Oil accounted for around half of the deterioration, with the balance swinging to a £320 million deficit in May from a surplus of £201 million the month before, largely due to a surge in imports as domestic production geared down.
Total goods imports rose 3.9 per cent to hit a new record of £27.947 billion, driven by higher imports of cars, capital goods and aircraft. Exports dipped 0.6 per cent. The ONS said its estimate of the trend was that the gap was widening.
The pound fell nearly half a cent against the dollar and hit a day's low against the euro after the data.
Analysts said the figures held few implications for monetary policy, although policymakers may be concerned that a sustained pick-up in exports from Europe has yet to materialise.
Britain had a £2.335 billion surplus in the trade in services, up from £2.141 billion in April, taking the total trade deficit to £4.418 billion from £3.427 billion the previous month.
Excluding oil and erratic items, the total goods deficit widened to £6.137 billion from £5.664 billion, the highest since February, due mainly to higher car imports and lower exports of capital goods, the ONS said.