Figures on trade are first in General Election run-up

By DAN ATKINSON, MAIL ON SUNDAY ECONOMICS EDITOR
Updated: 17:06 EST, 10 April 2010

Figures due on Tuesday are expected to show that Britain still has a severe trade deficit. They will be the first in a string of economic announcements over the coming month that could prove flashpoints in the General Election campaign.

Inflation, unemployment and retail sales data will also be released in the coming weeks and the string of figures will climax on April 23 with the first estimate for economic growth, or lack of it, during the first three months of this year.

This week's trade figures for February may show a slight improvement, but they come after months of worsening trade, with imports massively outweighing exports.

Stagnant: The weaker pound has failed to boost UK exports

Britain's deficit with the rest of the world was £3.8 billion in January, against £2.6 billion in December and £2.5 billion in January 2009.

Neither the weaker pound nor the depressed state of consumer demand has so far helped boost exports or dampened Britain's appetite for imports. Independent consultancy Capital Economics said there were two reasons why the decline in sterling's value had failed to boost exports.

'The first is that over half our exports still go to Europe, yet the recovery there seems to be flagging,' it said. 'In contrast, growth remains strongest in Asia, yet exports there accounted for just 11 per cent of the total in 2008.'

It said the second reason was that some exporters had been pocketing the gains of sterling's decline by putting up their foreign currency prices rather than using the cheaper pound to build up their share of overseas markets.

Other possible flashpoints in the April economic calendar include:

• Inflation figures, due April 20. The latest Consumer Prices Index showed the cost of living at three per cent, sharply down on the 3.5 per cent for the year to January. Another fall would be good for Labour. A rise would suggest unseen horrors lurking in the system.
• Unemployment and latest earnings figures, due on April 21. In February, the claimant count measure of joblessness was down by 32,300 on January at 1.59 million. The measure is a little unpredictable and a small movement either way in March is unlikely to make big news. More worrying for Labour may be figures for average earnings - the most recent figures showed public sector pay rises soaring ahead of the private sector.
• The first estimate for GDP in the first quarter of this year. After falling for six quarters, GDP rose by 0.4 per cent in the last quarter of 2009. Expectations are for something similar in the first quarter of this year. But a smaller-than-expected rise, or even a fall, would stoke fears of a double-dip recession.