Record trade deficit adds to Britain's economic woes

A record trade deficit, falling employment and a sharp slowdown in shop price inflation reinforced fears that Britain is fast heading for another downturn as the eurozone debt crisis escalates. Wednesday's data came after the Confederation of British Industry cut its forecast for UK growth for this year and next, and supermarket chain Sainsbury's warned of tough times ahead.
---- Jobs survey points to further rise in unemployment
The welter of gloomy news is piling pressure on British finance minister George Osborne to come up with a plan to boost growth when he delivers his autumn budget statement to parliament later this month, though he has already ruled out easing the pace of his austerity measures.
Worries that Britain may face another recession prompted the Bank of England to resume its quantitative easing programme with a 75 billion pound cash injection last month, and many analysts reckon it will eventually have to pump in more stimulus, though not at this month's policy meeting.
Official data showed Britain's goods trade deficit widened to 9.8 billion pounds in September, its highest since the series began in 1998, after a record jump in imports countered a tepid rise in exports. Economists said the numbers were a further sign that the crisis in the eurozone had dampened Britain's exports, and cautioned against interpreting the surge in imports as a harbinger of recovering domestic demand.
Figures from the Office for National Statistics showed the rise in the deficit was driven by a 1.2 billion pound surge in imports to a record 34.27 billion pounds. Exports, meanwhile, rose by just 52 million pounds. Britain sells around half of its exports to the eurozone, and the region's spiralling debt crisis has hit hard. The lastest purchasing managers' survey for manufacturing showed export orders have fallen for the last three months.
Business minister Vince Cable said the eurozone crisis was having a double-whammy impact on UK firms by damaging confidence and therefore demand for British goods, as well as impacting on banks' ability to lend. The economy has barely grown in the last year and policymakers are worried that a sharp slowdown in its main trading partners could rise Britain back into recession at a time when consumers are cutting back spending.
The head of Britain's third largest supermarket group Sainsbury's, Justin King, said shoppers were "under tremendous pressure" as disposable incomes were squeezed by higher prices, muted wages growth and austerity measures. The CBI business lobby group said continued uncertainty in the eurozone was the main reason why it downgraded its UK growth forecast to 0.9 percent this year from a previous 1.3 percent.
And it said it expected inflation to fall back to 2.2 percent by the end of next year - close to the BoE's 2 percent target - from a current 5.2 percent. Meanwhile, the KPMG/REC report on jobs showed permanent staff placements by recruiters fell for the first time in two years and salaries stagnated - highlighting the weak state of the labour market and heralding a further rise in unemployment from the 17-year high hit in August.