The Bank of England kept interest rates on hold at 4.5 per cent yesterday, as latest official figures showed Britain suffered a new record £5.96 billion trade deficit with the rest of the world in November.
Surging oil imports were the biggest factor in driving up Britain’s trade deficit much faster than expected.
The UK was a net importer of oil for the fifth month in a row in November, the longest period since monthly records began in 1980.
The November trade gap in goods and services widened to £5.96bn from a deficit of £5.05bn in October, said the Office for National Statistics (ONS).
The November figure was more than £1bn higher than economists’ forecasts.
The goods trade gap with non-EU countries also widened to £3.02bn in November from £2.28bn in October. Economists had forecast a deficit of about £2.5bn.
At the end of its January meeting yesterday, the Bank of England Monetary Policy Committee (MPC) announced it was keeping rates on hold at 4.5 per cent.
It is the fifth month in a row that the MPC chose to keep the cost of borrowing unchanged. Rates were last cut in August, when they were trimmed from 4.75 per cent to 4.5 per cent.
The TUC expressed its disappointment, yesterday.
Commenting on the decision, TUC Chief Economist Ian Brinkley said: ‘Despite unfavourable global economic conditions, the UK economy has fared relatively well and is on track to do better.
‘But this could all unravel if today’s decision to hold is repeated next month.
‘Without a cut in rates, there is a real risk of a downturn in the economy. The Bank must act to cut rates sooner rather than later.’
The Transport and General Workers Union (TGWU) was also disappointed, having Wednesday thrown its weight behind calls for the Bank to cut rates.
Peter Booth, TGWU national organiser for manufacturing, complained: ‘We need a level playing field on interest rates with the EU economies and the brutal truth is we don’t have it.
‘If we are to lift UK manufacturing from its consistently parlous state, a rate cut is essential.’
The Office for National Statistics said manufacturing output grew by 0.4 per cent in November after a fall of 0.8 per cent in October. However, output was still 1.8 per cent lower than a year earlier.
• Second news story
KELLY SURVIVES – THANKS TO TORIES
Ruth Kelly survived as Education Secretary in the House of Commons yesterday when the Tories refused to call for her resignation after her crisis statement on people on the Sex Offenders Register being allowed to work as teachers.
She was making a statement to MPs after more cases of suspected sex offenders being allowed to teach in schools came to light.
In her statement, Kelly said that ‘the law says each case has to be dealt with individually’.
She added that she would be carrying out another review of procedures and would be bringing forward new legislation in February ‘so cautions and convictions are treated equally’ for purposes of the sex offenders register.
Tory shadow education secretary David Willetts confined himself to criticising the state of the education department, saying Kelly ‘doesn’t even know who takes decisions’, and called on her to state how many sex offenders have been allowed to work in schools.
He and other Tories asked Kelly to say how many clearances to teach she was personally responsible for.
Kelly stonewalled, saying ‘I, as secretary of state, take full responsibility for all the decisions taken in my department.’
She said she would investigate the situation and update MPs within ‘weeks, not months’.