Britain's goods trade gap with the world hit a record high in September, official statistics showed today, suggesting strong economic growth is being driven by powerful domestic demand.
The Office for National Statistics said the overall gap grew to £7.754 billion from £6.948 billion in August. Economists had forecast a deficit of £6.9 billion.
The goods trade gap with non-EU countries widened to £4.711 billion from £3.953 billion in August. Analysts had forecast a deficit of £3.9 billion.
The overall goods trade gap was partially offset by a £2.7 billion surplus on services, barely changed from the previous month, driven by London's financial markets.
The figures are unlikely to have much impact on the current monetary policy debate but may be read as a sign that net trade will be a drag on overall economic growth in the coming months.
"The trade data for the third quarter as a whole are consistent with external trade making the largest negative contribution to quarterly gross domestic product growth since 2002," said Peter Newland, an economist at Lehman Brothers.
Britain's economy grew 0.8 per cent in the third quarter and at the fastest annual pace in three years, although higher interest rates and the global credit crunch are expected to take their toll.
"Looking forward, we expect domestic activity to cool and external trade to continue to be a drag on growth, consistent with a quite a sharp slowdown in GDP growth in the fourth quarter," Mr Newland said.
The pound, trading close to 26-year highs against the dollar, fell a fifth of a cent immediately after the data before popping up again.