Britain’s trade in goods deficit shrank by more than expected in May to the lowest level in three years as "distressed" consumers cut back on buying imported goods.

The Office for National Statistics (ONS) said the trade gap in goods fell from £7.137 billion in April to £6.2 billion pounds in May, as imports from non-EU countries slumped.

The reading is much lower than the £6.75 billion gap forecast by analysts and a positive boost for the economy ahead of today's interest rate decision by the Bank of England.

The total trade deficit in goods and services narrowed from £3 billion in April to £2.2 billion in May. The ONS said that the improvement was driven by lower imports

Colin Ellis, chief European economist at Daiwa Securities, said: "While the weak pound has yet to offer much significant support to exports — that will probably have to wait until world demand recovers — UK firms and households are increasingly switching from foreign to domestic suppliers, offering a boost to domestic activity."

David Page, UK economist at Investec, said: "The improvement is coming from a contraction in imports rather than higher exports. The figures are showing consumers in distress rather than a strong exports picture. They will also have been flattered by the recent strength in sterling."

The figures were also boosted by the first oil surplus since September — the biggest surplus since December 2004. The ONS said that the oil surplus might have been because UK refineries were running down stocks due to closure for maintenance in April and May.

The goods trade gap with non-EU countries narrowed to £3.264 billion from £4.116 billion, also below forecast and the narrowest since April 2007.

The pound rose slightly against the dollar this morning, but quickly pared some of the gains. Sterling is likely to come under pressure today as the Bank gears up to announce whether it would extend its scheme of quantitative easing.

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