"Net exports are expected to suffer from continued weakness in the euro-zone economy"
- Vicky Redwood, an economist at Capital Economics Ltd.
The U.K. trade gap widened more than it was initially expected, as exports tumbled, led by a decline in capital goods. The Office for National Statistics said Thursday, that the goods trade deficit rose to 9.54 billion pounds ($15.4 billion) in October, up from 8.44 billion pounds in the previous month. At the same time, exports from the county lost 1%, while imports added 2.5%. The goods deficit with the countries from European Union, which accounts around half of nation's exports, widened to 5 billion pounds in October, compared to 4.5 billion pounds in September.
"Net exports are expected to suffer from continued weakness in the euro-zone economy," said Vicky Redwood, an economist at Capital Economics Ltd. in London. "We think that the economy will recover even more slowly than it now expects."
Also Thursday, the Bank of England decided to keep its benchmark interest rate unchanged at 0.5%, the record low since March 2009. The bank also has decided not to extend its quantitative easing stimulus programme, which has already injected £375 billion into the nation's financial system. The decision was unexpected as Chancellor George Osborne said on Wednesday that the economy would grow much more slowly than expected, and will shrank by 0.1% in 2012.
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