The UK trade gap with the rest of the world widened to a record £3.9 billion in September, official figures showed yesterday.

Falling exports and rising imports were behind the estimated rise from the revised figure of £2.6 billion in August, data from the Office for National Statistics (ONS) showed.

Experts said the figures cast doubt over prospects for a manufacturing recovery.

They also warned that they represent "another piece in the jigsaw" of similarities with the late Eighties, when a large deficit came on the back of high consumer debt and a booming housing market.

John Butler, of HSBC, said: "It simply illustrates the risks facing the UK."

The figures showed that the UK's deficit on trade in goods is provisionally estimated at £4.8 billion against a revised £3.4 billion in August. Trade in services showed a surplus of £900 million against £800 million in August.

During September, total exports of goods fell 2.5 per cent to £15 billion while total imports advanced 5 per cent to £19.8 billion, the ONS said.

Exports of goods to European Union countries fell two per cent and imports from the EU rose three per cent, while exports to countries outside Europe dropped 3.5 per cent and imports rose eight per cent.

The UK notched up its first monthly oil trade deficit since August 1991, standing at less than £100 million against a £400 million surplus in August this year.

Analysts said extended maintenance shutdowns in the North Sea partly explained the deterioration, depressing exports of crude oil and pushing crude imports to their highest level since the early part of 1985.

But Simon Rubinsohn, at stockbroker Gerrard, said the deficit in trade excluding oil and other erratic items also increased sharply during the month.

The pick-up in manufacturers' export prices evident in the first half of the year appeared to have run out of steam, he said.

"It suggests profit margins in the industrial part of the economy will struggle to recover," Mr Rubinsohn said.

Mr Butler said there were "huge differences" between now and the Eighties, but added: "The lesson then was that these imbalances led to volatility in both interest and exchange rates."

Wednesday November 12, 2003