UK Trade Deficit Widens as Exports Drop to Four-Year Low

        LONDON--Britain's trade deficit widened in February after narrowing sharply the month before, as exports of goods fell to their lowest in more than four years.
        The gulf between the value of what the U.K. sells abroad and what it buys was 2.9 billion pounds ($4.3 billion) during the month, the Office for National Statistics said Thursday. This is compared with a much narrower GBP1.5 billion deficit in January, a wider figure than in previous estimates but still the lowest level in almost a year.
        The trade deficit grew wider mainly due to a drop in exports of goods to countries outside the European Union, chiefly the U.S.
        Britain traditionally has a hefty deficit when trading in goods with the rest of the world but continues to record large surpluses in services.
        The U.K.'s struggle to ramp up exports has become an issue in the campaign for the general election in May 7. U.K. Treasury chief George Osborne pledged in 2010 to double sales abroad to GBP1 trillion by 2020. However, official data show exports have remained stubbornly flat during the last five years. The volume of U.K. exports as a share of the country's economy is low compared with other western nations.
        The main opposition Labour Party argues for a "cultural revolution" to encourage British companies to export more. The center-left party unveiled Tuesday the results of an independent review, which argued in favour of the government providing more help to small and medium companies to open overseas markets.
        "While the economy is moving steadily forward, weak exports seem to be the headache we just can't shake off," said Simon Moore, international director at the Confederation of British Industry, which represents 190,000 U.K. businesses.
        Trade was a hindrance for the U.K. economy throughout 2014, due to stagnation in the eurozone--its main market abroad--and the strength of the pound, which makes British products more expensive overseas. In February, sterling rose to its highest level in more than six years when measured against the currencies of its main trading partners, according to data from the Bank of England.
        The pound received a powerful lift against the euro after the European Central Bank announced in January a new scheme to buy 60 billion euros ($64.44 billion) a month of eurozone sovereign bonds--a policy known as Quantitative Easing, or QE. The aim of the central bank is to spur economic growth in the troubled 19-nation bloc by driving investors into riskier assets and at the same time lower the value of the single currency--as money flows into other markets--to help make exports cheaper.
        Some economists worry that the trade deficit could threaten the health of the British economy long-term. Trade is the main component of the U.K.'s current account, which records the nation's transactions with other countries. Official data showed last month that Britain had a GBP97.3 billion deficit in its current account in 2014, the highest since records began in 1987, meaning the country is increasingly in debt with the rest of the world.
        The Bank of England underscored Tuesday that the deficit "was large and could, in adverse circumstances, trigger a deterioration in market sentiment towards the United Kingdom."
        Other analysts, however, say the current account deficit is unlikely to have negative effects on the U.K. economy, since it is the consequence of the willingness of foreigners to keep investing in British assets.
        -Write to Jon Sindreu at jon.sindreu@wsj.com and Jason Douglas at jason.douglas@wsj.com
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        (END) Dow Jones Newswires

        April 09, 2015 04:50 ET (08:50 GMT)

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