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LONDON (Reuters) - Britain's goods trade deficit widened more than expected in October as exports fell and the prices of goods sold abroad dropped, data showed on Thursday.
The Office for National Statistics said the value of goods trade deficit grew to 9.539 billion pounds from 8.439 billion pounds in September - more than even the highest forecast by economists. They had on average predicted a gap of 8.8 billion pounds.
The goods trade deficit with non-EU countries widened to 4.532 billion pounds from 3.943 billion pounds in September, also higher than forecasts for a gap of 4.2 billion pounds.
Taking into account the first 10 months of the year, the goods deficit has been running at an average of 8.9 billion pounds a month, compared to 8.4 billion last year, the ONS said.
Exports fell by more than 10 percent over the year to some EU countries, including Italy and Spain, and by almost a quarter to Canada. However, they rose by more than 5 percent over the year to China and the United States.
The latest figures will deal a fresh blow to Chancellor George Osborne, who said on Wednesday that Britain was set to endure more austerity and would break a central debt-cutting promise to cope with weaker growth.
Coupled with real-term welfare cuts and an extension to tax rises and spending cuts, the statement will have done nothing to improve Prime Minister David Cameron's election chances.
The economy is now seen growing just 1.2 percent next year and 2.0 percent in 2014, according to figures from the Office for Budget Responsibility announced by Osborne. That is a sharp revision from respective 2.0 and 2.7 percent predictions made in March.
The Bank of England will announce its monthly policy decision at midday and despite the recent spate of gloomy news none of the 66 policy-watchers polled by Reuters last week expected any change to the record-low interest rate - or indeed until early 2014.
No change is seen in the central bank's 375 billion pounds asset purchase programme either.
Reporting by Olesya Dmitracova and Jonathan Cable