Hopes of a recovery in the global economy rose today as figures showed Britain's trade deficit with the rest of the world narrowed in January.
A rise in exports to the United States helped cut the goods deficit by £500 million to £2.6 billion, said the Office for National Statistics (ONS). The improved performance came despite the gap with European Union countries widening to its largest level since April 1999.
With Britain's trade in services showing a surplus of £1 billion, the overall trade deficit fell back to £1.6 billion from £2.1 billion.
City experts were expecting little change on December's trade gap and said the figures pointed to better times ahead for UK manufacturers. HSBC economist Mr John Butler said: "This provides further confirmation that the global recovery is under way".
Imports of consumer goods rose strongly during the month, up 4.5 pre cent, while imports of semi-manufactured goods were weaker.
But Philip Shaw, chief economist at Investec, said the widening deficit with EU countries showed the euro zone was continuing to struggle. "It is wait and see, but the figures are certainly encouraging for the effect of the world recovery on the domestic economy," he said.
The ONS said Britain's goods deficit with the EU widened to £943 million in January, compared with £740 million the month before.
For the three months ended January the deficit with the EU was £2.4 billion, compared with £1.3 billion in the previous quarter.
PA