Britain's goods trade deficit with the rest of the world widened slightly in May as robust economic growth increased demand for capital goods and outpaced a surge in car exports.
The Office for National Statistics said today that the global trade gap widened to £4.62 billion sterling in May from a revised £4.59 billion in April. This compared with market expectations for a gap of £4.5 billion.
The widening was driven mostly by a deterioration in the trade position with non-EU countries, with that gap rising to £2.29 billion compared with £2.17 billon in the previous month and versus expectations of £2.2 billion.
Economists said that trade could act as drag on growth in the second quarter and might afford the Bank of England some breathing space in its credit tightening campaign, although an interest rate hike next month is highly likely.
The ONS said that the latest estimate of the trend suggested that Britain's global trade gap in goods was widening, although including services it remained fairly flat in recent months.
The pound briefly fell against the dollar after the figures were released but hovered near a three-month peak near $1.85. British interest rate futures were unmoved by the figures but traded slightly higher on the session.