Total trade deficit hits record high in June
LONDON (Reuters) - Britain's total goods and services trade deficit hit a record high in June, after a sharp drop in goods exports, confirming the bleak picture painted by an early estimate of second-quarter gross domestic product last month.
The figures will be a disappointment to the government and the Bank of England, which have been hoping for an export-led recovery to lead Britain out of its second recession in four years.
However, the euro zone debt crisis has been hurting demand in Britain's main export markets and the Bank has warned that a recent rise in sterling against the euro poses a threat to British manufacturers.
The Office for National Statistics said the June trade deficit widened to 4.308 billion pounds from 2.718 billion pounds, the largest since records began in 1997.
This was driven by a bigger-than-expected widening in the goods trade deficit, which grew to 10.119 billion pounds from 8.364 billion pounds, well above economists' forecasts of a much more modest rise to 8.63 billion pounds.
British industrial output contracted by 2.9 percent in June, due in part to extra public holidays to mark Queen Elizabeth's 60 years on the throne, and economic output as a whole was 0.7 percent lower -- the sharpest fall since 2009 in the immediate aftermath of the financial crisis.
Goods exports were down 7.4 percent in volume terms in June, the biggest drop since April, and fell to their lowest total value since November 2010 at 23.453 billion pounds.
The figures for the three months to June, which are less volatile than the monthly numbers, painted just as grim a picture.
The total goods and services trade deficit for the second quarter rose to 11.214 billion pounds, the highest since records began, and a figure that suggests net trade was a significant drag on British GDP in the second quarter.
Exports in the three months to June fell at their fastest pace in volume terms in a year.
The ONS said the fall in exports had been driven by sharp falls for oil, cars and chemicals, in particular pharmaceuticals.
(Reporting by David Milliken and Jonathan Cable)
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