Trade UK
The UK suffered a record traded goods deficit of £8.6bn with the EU in February Reuters

Britain's trade deficit on goods and services narrowed slightly in March, figures released on Tuesday (10 May 2016) by the Office for National Statistics (ONS) showed. According to data published by the ONS, the UK's trade deficit on goods and services declined from £4.3bn in February to £3.8bn in March, as the deficit on goods and services both narrowed in the period.

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The trade in goods deficit declined from £11.4bn in February to £11.2bn in March as exports increased by £0.4bn to £23.7bn on the back of a rise in unspecified goods and machinery and transport equipment.

The trade-in-services surplus, meanwhile, increased from £7.1bn in February to £7.4bn in March, the ONS added.

"The narrowing of the trade deficit in March is not much to celebrate," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"It remained bigger than its 12-month rolling average for the sixth consecutive month, and did not make up for dreadful deficits in January and February."

On a quarterly basis, the total trade deficit for goods and services in the first quarter widened by £1.1bn to £13.3bn compared with the previous three months, marking the widest gap since the first quarter of 2008. Across the same period, the trade in goods deficit widened by £1.4bn to £34.7bn, which the ONS attributed to a £1.9bn rise in imports of goods to £104.6bn.

Economists suggested the slowdown in domestic demand should bear down on imports, helping the trade deficit to narrow further but the outlook for exports remained bleak. Scott Bowman, UK economist at Capital Economics, said: "External demand doesn't appear to be providing any support to the recovery and is compounding the domestic uncertainty created by the upcoming EU referendum."

However, he added that the 9% decline in trade-weighted sterling since November could deliver a boost to exporters over the coming months as contracts are renegotiated.

"We think that global growth will pick up this year," Bowman said. "But for now, the responsibility for driving GDP growth lays with the domestic services sector."