Britain's economic prospects received an unexpected boost today as official figures showed that the trade deficit had narrowed to £3.9 billion in September by far more than expected.

The gap between imports and exports fell from £4.4 billion in August and £4.8 billion in July, according to the Office for National Statistics (ONS).

The narrowing deficit suggests that the weaker pound is boosting overseas demand for British goods but making it harder for importers paying in the UK currency.

The ONS said exports rose by 3 per cent to £21.9 billion in September, while imports increased by 0.5 per cent to £29.3 billion.

Despite the apparent boost to UK businesses, the ONS said the overall trend with the trade deficit in recent months had been flat.

Economists hailed the "all-too-rare good news", which came about largely as a result of a sharp fall in the oil deficit.

However, some forecasters gave warning that the underlying picture was not quite as rosy. They said UK exporters could suffer as a result of falling demand from weakening markets in the US as well as the eurozone.

"While UK exporters will benefit from the markedly weaker pound, this seems certain to be increasingly countered over the coming months by very weak domestic demand in key overseas markets," said Howard Archer, chief UK and European economist at IHS Global Insight.

Mr Archer added that shrinking domestic demand among UK consumers hit by the economic downturn will mean that imports will be limited. He said foreign companies would find it harder to compete because of the weaker pound.

Although trade could end up making a positive contribution to UK GDP, this will not stop economic output tailing off markedly over the coming months, he said.

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