U.K.'s deficit on trade in goods soared to the highest since January 2009 as growth in imports outpaced the rise in exports.

The visible trade deficit widened to GBP 7.3 billion in December from GBP 6.8 billion in November, according to data released by the Office for National Statistics on Tuesday. The deficit stood above the consensus forecast of GBP 6.7 billion. Exports rose 4.5% to GBP 20.9 billion, and imports increased 5.2% to GBP 28.2 billion.

Vicky Redwood, an economist at Capital Economics, said trade figures suggest that the external sector is still feeling little benefit from either the lower pound or tentative global recovery. Further, the economist said net trade is unlikely to be in a strong enough position to offset the looming weakness in the public and consumer sectors.

Month-on-month, export and import prices of goods were up 0.1% and 0.3%, respectively. This led to a decrease in the terms of trade. Excluding the oil price effect, increase in export prices was 0.3% and that in import prices came in at 0.7%.

The trade with EU nations showed a shortfall of GBP 3.7 billion in December, the same as in November. Meanwhile, the deficit with non-EU nations surged to GBP 3.6 billion from November's GBP 3.1 billion.

The surplus on trade in services was GBP 4 billion compared with November's GBP 3.9 billion surplus. This increase in surplus on trade in services was offset by the visible trade deficit. Total trade balance showed a deficit of GBP 3.3 billion in December, larger than the GBP 2.9 billion deficit seen in November. The expected shortfall for December was GBP 2.8 billion.

In the fourth quarter, total trade deficit increased to GBP 9.5 billion from GBP 8.1 billion in the third quarter. The visible trade deficit, at the same time, widened GBP 1.4 billion to GBP 21.3 billion.

In 2009, the deficit on trade in goods and services narrowed by GBP 4.4 billion to GBP 33.8 billion. The overall trade deficit included GBP 48.1 billion surplus on trade in services. With in the total trade balance, the visible trade deficit fell by GBP 11.5 billion to GBP 81.9 billion in 2009. Goods exports were down 9.5%, while imports dropped 10.3%.

'Given the favorable international environment for British exporters, with a competitive sterling exchange rate and global growth edging up, our overall trading performance is not strong enough,' said British Chambers of Commerce Chief Economist David Kern. He urged the government to back exporters more forcefully as other competitors do and adopt steps aimed at ensuring adequate trade finance.

Earlier today, the German statistical office confirmed that China overtook Germany as the world's largest exporter in 2009. Chinese exports amounted to US$1,201.7 billion, while German exports totaled US$1,121.3 billion in 2009.

Source: Forex: U.K. Vis...