The gap between what the UK is exporting and importing widened to £8.6bn in November from £7.9bn the previous month, above City forecasts for a deficit of £8.3bn, according to the Office for National Statistics (ONS).

The increase, driven by lower exports of silver to non-EU countries and higher imports of chemicals, reversed much of the improvement seen in October. Then, the ONS reported that the trade gap narrowed at the fastest pace since records began, from a record £10.2bn in September to £7.6bn - although that was revised up to £7.9bn in the latest release.

The trade gap when services – of which the UK is a net exporter – were included stood at £2.6bn for November, against £1.9bn the previous month.

“Some deterioration was always likely after October’s surge, but the UK’s trade performance held up reasonably well in November,” said Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club.

“The trade deficit remains lower than it was for much of 2011 and, while export volumes slipped back from the October peaks, they remain surprisingly firm given the slowdown in the global economy in the second half of 2011.”

Alan Clarke, UK economist at Scotiabank said net trade should still provide a boost to the UK’s economic output for the fourth quarter of 2011, yet to be released. Trade can make a positive contribution to a country’s growth figures even if exports outweigh imports, provided that the balance improves.

“Let’s hope so, because [business] inventories are going to provide the mother of subtractions from overall GDP and consumption is likely to shrink again,” he said.

The third quarter of 2011 saw net trade subtract a 0.4 percentage point off the UK's overall GDP growth, which was 0.6pc quarter-on-quarter.

Source: UK trade gap widens more than expected as exports fall - Telegraph

AtW's comment - cut taxes on profits made from exports