Britain's trade deficit has grown by £100m year-on-year, according to new figures released by the Office of National Statistics for January 2012, bringing the total deficit to £1.8bn. The month-on-month increase is £600m, up from December's £1.2bn deficit; trade deficits are notoriously volatile, however, as evidenced by the massive fall from November, when the deficit stood at £3.2bn.
Excluding oil and other erratic goods, the volume of exports increased by 2.2 per cent month on month and 1.6 per cent in the three months to January, while the volume of imports rose by 1.8 per cent and 0.1 per cent respectively. Although energy dependency is not a concern which should be ignored, the wider issue of trade deficits is relatively distinct from it. The news that exports are growing faster than imports will be welcome to the Chancellor who has long pinned weak growth to a flatlining export market to the Eurozone. On the other hand, although the growth isn't large enough to return us to a healthy amount of exports, it may start getting harder for Osborne to use that same excuse if growth fails to pick up.
Breaking the information down by country reveals this interesting graph:
Yes, our largest trade deficit for this January wasn't with China, India (who aren't even mentioned in the report), or any other emerging economy, but with Norway.
This deficit is almost entirely due to trade in oil and natural gas, however, and so subject to the same fluctuating prices and availability that leads to those goods being excluded from several measures. In addition, China comes far closer to topping the gross deficit chart, as one would expect, with our £900m worth of exports to them knocking them back to second place in the net chart.
Our most important trading partner remains Germany, with just over £20trn of combined imports and exports, and the US is second with £16.9trn of combined imports and exports.