11/01/2012 12:30 GMT

UK Trade Gap Widens To £8.6bn As Exports Fall

The UK's trade deficit widened to £8.6bn in November, according to the Office for National Statistics (ONS), as the country's exports dipped by 1.5%. Worryingly for the British economy, the fall was driven by a weakness in orders from non-European Union countries, such as India.

Exports to the eurozone, still mired in a sovereign debt crisis and likely to fall back into recession in 2012, grew.

This is alarming for the UK, which has hoped to offset the fragility of its European export markets with improved trade relationships with emerging market powerhouses India and China.

An improvement in the US economy is possible in 2012, and China remains strong, but a likely fall in orders from the eurozone will probably offset any growth, Howard Archer, chief UK and European economist at IHS Global Insight, warned.

"At the same time though, muted domestic demand is likely to limit UK imports," he added.

Imports grew by 1.1% to £34.4bn, with the country importing a record amount of chemical products and increased its purchases of crude oil.

A mooted export-led recovery looks unlikely, according to Archer.

"Looking through the recent erratic monthly moves in the trade data, there is little evidence overall of marked improvement, which is disappointing for hopes that improved exports can boost overall growth and help the UK economy to become more balanced," he said.