Annual Trade Deficit At Widest Since 2010

The UK's annual trade deficit last year was at its widest since 2010, according to official figures which highlight the extent of the challenges facing UK exporters.

The Office for National Statistics (ONS) said the figures showed the biggest gap in goods - the difference between the value of imports and exports - ever recorded.

The goods deficit rose by £1.9bn to £125bn in 2015 - at a time of weak demand overseas and with a strong pound making UK products more expensive.

The ONS measured a decrease in both goods exports and imports.

The goods and services trade deficit for the full year was £34.7bn. That was its widest gap for five years and £300m up on 2014, though December's deficit came in below market expectations.

Sterling barely moved in response to the figures, which will help give a clearer picture of UK economic growth for the final quarter of 2015 when the ONS updates its first GDP estimate later this month.

Martin Beck, senior economic advisor to the EY ITEM Club, said: "Over the quarter exports fell back, while imports continued to rise.

"This suggests that net trade is likely to have exerted a drag on GDP growth in Q4 (the fourth quarter).

"Falling exports to non-EU countries were largely responsible for the soft overall figures."

He added: "However, these poor figures mask some areas of strength. Goods exports grew by 15% to the US and by 7.7% to the EU in volume terms.

"We expect this stronger performance from our main trading partners to be sustained and, allied to the support offered by the recent depreciation of the pound, to generate a steady improvement in the UK’s exports this year."