THE grim state of the UK economy has been underlined in fresh official figures showing a yawning 2012 current-account deficit, resulting partly from a widening trade gap, and an even steeper-than-thought drop in industrial production in the fourth quarter.
National accounts data, published yesterday by the Office for National Statistics, confirmed that UK gross domestic product fell 0.3% in the final quarter of last year. A further drop in the current quarter would see the UK record its third recession since 2008.
Separate balance of payments data from the ONS, meanwhile, showed the UK's current account deficit for the fourth quarter of 2012 came in at £14 billion – overshooting City forecasts of a £12.7bn shortfall – as the country's net trade position remained woeful.
The current account deficit for 2012 was £57.7bn. This amounted to 3.7% of gross domestic product – the highest proportion since 1989. The current account deficit had amounted to 1.3% of GDP in 2011.
The UK's deficit on trade in goods and services with the rest of the world jumped from £24.1bn in 2011 to £36.2bn in 2012.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "UK goods exports have primarily been held back by weakened domestic demand in the eurozone, but, in the fourth quarter of 2012, the weakness in traded goods was actually more marked to non-EU countries, particularly the US.
"This export performance is really disappointing, even allowing for the problems in the eurozone and generally muted global growth, and a blow to hopes that the economy can rebalance."
The ONS now puts the slide in industrial production in the fourth quarter at 2.1%, in the national accounts data, having estimated it at 1.9% last month and 1.8% in January.
Industrial production includes mining and quarrying, oil and gas extraction, and electricity, gas, and water supply as well as manufacturing output. The ONS noted the part played by maintenance work in the North Sea in a 10.7% quarter-on-quarter tumble in output of the "mining and quarrying including oil and gas extraction" category in the final three months of last year. Manufacturing output fell 1.4% in the fourth quarter.
A survey published yesterday by the Federation of Small Businesses showed that Scottish small business confidence rose in the first quarter of 2013 but still lagged the UK average. It showed an improvement in the investment intentions of Scottish small businesses but fewer applying for finance.
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