UK exports
UK exports have collapsed further in the second quarter (Reuters)
UK exports have collapsed further in the second quarter (Reuters)

Britain's trade deficit grew bigger in the second quarter, reaching £11.2bn compared with the previous three months' £7.8bn reported the Office for National Statistics (ONS), as the export market crumbles under the weight of weakening demand for manufactured goods in emerging markets.

Slowing growth in powerhouse non-EU economies such as India and China led to a collapse in new business orders for British exporters, putting Chancellor George Osborne's ambition of bringing the total value of UK exports to £1tn by the end of the decade in serious doubt.

Ongoing crisis in the eurozone also helped depress UK exports.

"Very hard to take anything positive from this data, it's a big downward surprise," Alan Clarke, Scotiabank analyst, said.

"Against the backdrop where our main trading partners, Germany and continental Europe, are very weak, this is no surprise, and the scope for improvement anytime soon is limited."

In the second quarter the value of UK exports hit £120.1bn, while imports totalled £131.3bn.

Osborne said in his 2012 budget that the export market represents a path to recovery for the UK economy, which slumped to a deeper recession in the three months to June with a -0.7 percent contraction in GDP.

He eyed the rapid-growth countries of Asia as the markets with demand potential worth tapping into, but recent GDP data from two of the biggest - China and India - shows that output expansion is falling.

India's economy grew at its slowest pace for nine years in the first quarter, while China's output growth slowed to a three year low in the three months to June.

The UK's non-EU exports have decreased by £1.7bn - 13.1 per cent - in June on the month before.

Britain's manufacturers have suffered because of the slowing global demand not just outside the EU, but inside too.

The eurozone crisis continues unresolved, weighing heavily on the member states within the single currency area and holding some of the bigger economies in recession, such as Italy and Spain.

As the UK's biggest trading partner, economic woe in the area crosses the channel to Britain and dampens output.

UK manufacturing output in June at the end of the second quarter slumped to its lowest level in four years, according to official data.

Private industry research suggests this turmoil has continued into the third quarter, with July figures showing output in the sector plunging to a 38-month low.

Hope now lies in two credit easing schemes launched by the Bank of England, which believes one of the biggest barriers to UK economic growth is the lack of access to affordable finance for small and medium sized businesses, with banks unwilling to take on lending risk in the current dire economic climate.

The Bank will offer British financial institutions discount-rate loans in direct correlation to the value of their lending to businesses and consumers, in the hope that this will increase the availability of credit for firms desperately needing a cash injection.