United Kingdom trade balance report was released today showing the trade deficit widened more than expected in February. This fuelled fears that Britain's exporters and the country's sluggish economic recovery could be hit hard, dampening the government's hopes of a quick export-led recovery.
The Office for National Statistics reported that the trade deficit grew to £8.8 billion in February from £7.9 billion in January. Expectations were for the trade deficit to be at £7.6 billion in February.
The main driver behind the widening gap in the trade deficit was due to a drop in exports to non EU countries. Exports of goods to non-EU countries fell 8.8 percent to £11.7 billion, while imports rose 1 percent to £16.7 billion leading to a trade deficit with countries outside the European single market of £5 billion.
However, the trade gap with the EU actually narrowed to £3.8 billion in February from £4.2 billion in January.
Recent surveys and economic data indicated that the UK may have just avoided a technical recession, returning to moderate growth in the first three months of 2012 after a contraction at the end of 2011.
But it must be noted that a sharp slowdown in the UK's main trading partner, the euro zone, could still weigh on exporters' prospects, though some business surveys have shown that orders from outside Europe keep flowing in.