UK trade deficit widens

The UK trade deficit widened to the highest level in nearly seven years in April, official figures showed Friday, as exports to the embattled eurozone plummeted. The goods and services deficit - the gap between imports and exports - rose to 4.4 billion pounds from 3 billion pounds in March, the Office for National Statistics (ONS) said. The increase was driven by an 8.6% drop in exports, including a 6.8% fall in exports to the EU, the UK's biggest trade partner, as the region's debt crisis rumbled on. Elsewhere, official construction data showed a sharp 13% fall in output in April driven by a fall in government projects, including housing and infrastructure. The double dose of disappointing data dampened hopes that the economy may return to growth and emerge from recession in the second quarter, analysts said. The UK economy shrank 0.2% in the first three months of the year, following a 0.3% decline in GDP in the final quarter of 2011, meaning the country entered a technical recession. Chancellor George Osborne is relying on a shift in the economy towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching package of public sector spending cuts. The Chancellor and Bank of England governor Sir Mervyn King last night unveiled plans for a multi-billion pound emergency bank funding scheme to kick-start lending to households and businesses in a bid to boost growth. But economists said the trade and construction figures were likely to dampen the positive mood following the announcements. They said: "Looking forward, the dominating influences on the UK's external position are likely to be the continuing impact of the eurozone crisis on exports." There was also a drop in car exports to non-EU countries, including the United States, China and Russia, following a surge the previous month, figures showed. Prime Minister David Cameron's official spokesman said: "Clearly, these are disappointing figures and I think they demonstrate the challenges in the global economy at the present time."