LONDON, Feb 10 - Britain narrowly avoided a new record international trade deficit in 2003 as flagging demand in Germany was outstripped by booming demand from the giant United States economy, official data showed on Tuesday. A narrower-than-expected December trade gap of 4.16 billion pounds brought the full-year total to a deficit of 46.4 billion pounds, just shy of 2002's high of 46.6 billion, which was the widest since records began in 1697. That said, the Office for National Statistics reported the total deficit in goods and services trade widened to a record in 2003, to 35.8 billion. The 2003 oil trade surplus shrank to 4.4 billion, the lowest since 1998 when it was 3.0 billion pounds. The annual surplus for services of 10.6 billion pounds, meanwhile, was the lowest since 1996, when it was 10.3 billion pounds. "The trend is still for modest deterioration because demand in the euro zone, which is Britain's main trading partner, remains pretty weak," said Adam Cole, economist at Credit Agricole Indosuez in London. The figures had little impact on financial markets although the pound gained yet more ground against the sliding dollar to near $1.87.
Exports in December to Britain's biggest single country trading partner, the United States, which is leading the global upturn in growth, rose by 350 million pounds to 2.65 billion although imports from America fell slightly. The December surplus with the U.S. rose to a record 856 million pounds in spite of the dollar hitting 11-year lows against sterling. Over the past year, the pound has appreciated by nearly one fifth against the ailing greenback. For the year as a whole, the trade surplus with the U.S. rose to a record 6.2 billion pounds from 3.3 billion the year before. Despite a fall in sterling in the first half of last year against the euro, the trade deficit with Germany widened to a record in 2003, 12.8 billion pounds, demonstrating the lack of demand in Europe's biggest economy. This lack of demand was reponsible for a record trade deficit in December with the EU, which rose to 2.75 billion pounds as exports fell marginally while imports, driven by strong domestic demand in Britain, jumped 5.1 percent. The trade balance with non-EU countries, however, unexpectedly narrowed to 1.4 billion pounds in December from 2.2 billion in November.//