U.K. First-Quarter Trade Gap Widens, Suggesting Drag on Economy

Britain’s total trade deficit widened in the first quarter, suggesting sluggish overseas demand dragged on economic growth in the period.

The trade gap on goods and services widened to 7.48 billion pounds ($11.6 billion) from 5.97 billion pounds in the fourth quarter of 2014, the Office for National Statistics said in a report published in London on Friday. Exports fell 2.3 percent and imports declined 1.1 percent.

The data, the first economic report since the election on Thursday, highlight the continued challenge the new government faces to rebalance the recovery away from domestic and consumer demand. The ONS said the trade data indicate there was a “small” drag on gross domestic product in the first quarter.

The economy grew 0.3 percent in the three months, and the statistics office will provide an additional breakdown at the end of this month, including data on consumer spending, exports and government spending.

In March, the goods trade deficit narrowed as exports to countries outside the European Union increased. The trade gap slipped to 10.1 billion pounds from 10.8 billion pounds in February. Exports rose 1.4 percent to 23.7 billion pounds, with sales to non-EU nations jumping 5.4 percent. Sales to the EU fell 2.9 percent, the ONS said. Imports fell 1 percent on the month.

There was a surplus on services of 7.31 billion pounds in March, leaving a total deficit of 2.82 billion pounds that month. Within goods, exports were led by consumer goods excluding cars, semi-manufactured goods, and chemicals.

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