By Maximilian Clarke

The UK’s monthly trade deficit has narrowed to its lowest level since 2003 in December as a healthy surplus in services exports and lower imports offset a marginal drop in goods exports.

Exports to the UK’s biggest market- the US- declined by £47 million whilst exports to France swelled by £267m. Imports from the UK chief trading partners all dipped slightly.

“The UK’s trade data show that some sectors are continuing to benefit from strong export demand, particularly in non-EU markets," commented Lee Hopley, Chief Economist at EEF, the manufacturers' organisation.

"Overall goods exports reached a record level at the end of last year, making some headway into the overall trade deficit and pointing to encouraging signs of rebalancing across the economy. It is critical this trend continues through 2012, given the reliance on net trade and investment to drive GDP growth this year.”

A reduction in input and output price inflations has seen the price of the UK’s exports decline steadily since September, boosting their competitiveness at a time of macroeconomic uncertainty across the eurozone.

The oil trade deficit narrowed to a £0.6bn low on account of the warm weather at the end of 2011. The recent cold snap will likely see this deficit widen beyond November’s £1.5bn gap.

Services exports narrowed marginally though remain in surplus of £6bn.

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