Economists sound note of caution as trade gap narrows to £7.4bn

ECONOMISTS have urged caution over new figures which suggest that UK exporters are finally starting to benefit from the weak pound.

According to the Office for National Statistics (ONS), Britain's goods trade gap narrowed to 7.4 billion in June from just over 8bn a month earlier.

The result marked a four-month low and came in well below the 7.8bn analysts had forecast.

Most of the 600 million fall was accounted for by the European Union - the UK's biggest trading partner - where the gap narrowed 400m after a 100m rise in exports and a 300m import slide.

Total exports jumped 900m or 4.3 per cent to 22.4bn over the month, against a 300m or 1 per cent rise in imports. Britain's trade performance has been disappointing for much of the past year as sterling's slide since 2007 has failed to offset weaker demand from many key trading partners.

The latest ONS data may rekindle hopes that a long-awaited rebalancing of the economy might still happen, although analysts will be reluctant to read too much into one month's data.

Howard Archer, chief UK economist at IHS Global Insight, said: "One swallow does not make a summer. The concern is that exports will be hit over the coming months by slowing global growth and recurrent problems in the eurozone."

lChina's exports grew strongly last month but import growth fell as its rapid economic expansion cooled. Slower import demand could hinder the global recovery.