Finance time

The U.K. trade deficit in goods narrowed for a second month in January as the weakness of the pound pushed exports to the highest in a year and a half.

The goods trade gap was 7.5 billion pounds ($15.6 billion), 10 million pounds less than in December, the Office for National Statistics said in London today. The result matched the median estimate in a Bloomberg survey of 24 economists. Exports rose 6.3 percent and imports rose 4.4 percent.

The report signals net trade may support economic expansion after it detracted from growth in 2007 for the first time in three years. The Bank of England is counting on a weaker pound to encourage exports this year, offsetting weaker spending by consumers at home.

“A weak pound will boost exports this year and next,'' said Peter Dixon, an economist at Commerzbank AG in London. “That should mean we have much less of a drag from net trade.''

Exports rose to 20 billion pounds in January, the most since June 2006, today's report showed. The value of imports, at 27 billion pounds, was also the highest in 19 months.

Weir Group Plc, the world's biggest maker of pumps for the mining industry, said yesterday its 2007 profit more than doubled as oil and gas customers upgraded equipment. The company makes most of its sales overseas.

Import Prices

Import prices rose 2.5 percent on the month, the most since July 2005. Excluding oil and erratic items, they climbed 2.2 percent, the most since 1993.

The trade deficit with the European Union, destination of half of British exports, narrowed to 3.2 billion pounds from 3.4 billion pounds the previous month, as sales to the region rose faster than imports, the statistics office said.

Against the euro, the currency of Britain's biggest trading partner, the pound traded at 76.48 pence per euro as of 10 a.m. today in London after reaching a record low of 77.17 pence on March 8 no qualifying payday advance quick payday loan. Versus the dollar, the pound has fallen back from a 26- year high of $2.1162 on Nov. 11 and traded at $2.016 today.

The pound has dropped about 8 percent in the past six months on an index compiled by the central bank measuring it against a basket of other currencies on a trade-weighted basis.

The global economy is weakening after the collapse of the U.S. subprime mortgage market prompted bank losses and writedowns of almost $190 billion. The Organization for Economic Cooperation and Development cut its forecast for expansion this year in its 30 member nations to “less than'' 2 percent, the weakest since 2003, Secretary General Angel Gurria said March 5.

Economic Growth

In the U.K., economic growth may slow to an annual 1.6 percent rate in the fourth quarter, matching the weakest pace since 1993, the Bank of England predicts. It forecasts the economy will rebalance away from consumer spending, supported by exports after they became less expensive to buyers overseas.

Chancellor of the Exchequer Alistair Darling estimated in October that the economy will grow at least 2 percent this year. He will release a new forecast in his budget today.

The economy grew 3.1 percent last year, the fastest pace since 2004, as spending by consumers, companies and the government outweighed net trade's 0.6 percentage point detraction from expansion.

The Bank of England kept the benchmark interest-rate unchanged at 5.25 percent on March 6 as policy makers assessed the need for lower borrowing costs against the threat of faster increases in consumer prices. The rate-setting panel has lowered the benchmark twice, by a quarter point each time, since December.

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