Exports boost narrows trade deficit

Exporters were given cause for optimism after new figures showed an improvement in the UK's trade deficit in March.

The Office for National Statistics (ONS) said the value of exports increased by 3.5% on the previous month, helping the deficit on trade in goods and services narrow to £3.1 billion from £3.4 billion a month earlier.

This was despite a 2.6% increase in the value of imports and a widening of the deficit with the European Union in the quarter, mainly on trade with Germany and the Netherlands.

Markit economist Chris Williamson said the trade data adds to signs that the manufacturing sector is finding its feet again, helped by the pound remaining 25% below its pre-crisis peak.

He added: "Official data and surveys paint an encouraging picture of the UK gaining market share in overseas markets, suggesting the economy is showing signs of rebalancing away from domestic consumption to export-led growth."

The ONS said on Thursday that manufacturing output rose for a second month in a row in March, having slumped during January's bad weather.