Britain narrowly avoided a new record international goods trade deficit in 2003 as flagging demand from the EU was outstripped by robust demand from the giant United States economy, official data showed today.
But the overall deficit in goods and services hit a record as traditional British strengths such as banking and insurance did less than usual to redress the balance.
A smaller-than-expected December trade gap of £4.16 billion sterling brought the full-year goods deficit to £46.4 billion, just shy of 2002's high of £46.6 billion, which was the widest since records began in 1697.
While the trade surplus with the US rose in 2003 to a record £6.2 billion from £3.3 billion the year before, the deficit with the EU widened last year to a record £23.8 billion, the Office for National Statistics said.
That raised concerns that the deficit trend will likely remain negative as the probability of a slowdown in the US far outweighs a potential surge in demand in Germany and the rest of the eurozone, where the majority of British exports go.
Such a sharp contrast between trade with the US and the eurozone came despite moves in currency markets that would tend to favour the opposite. The pound has rallied 16 per cent against the dollar since the end of 2002 and shows no signs of abating.