A surprise widening of Britain’s trade gap in December helped to push the nation’s annual trade deficit with the rest of the world to a record last year, official data revealed yesterday.

The pound was sent tumbling for a second day in a row after the disappointing figures showed the global deficit on trade in goods rose to £7.142 billion in December, up from £6.871 billion in the previous month.

After sterling was sent skidding on Thursday by the Bank of England’s decision to hold interest rates, the pound again fell sharply. It shed just under a cent against the dollar to a one-month low of $1.9484. Sterling’s trade-weighted index also fell by a little less than a third of a point to 104.9.

Despite this easing back in sterling in the past few days, the further rise in the trade gap was driven by a continuing deterioriation in UK export performance which will add to concerns over the present strength of the pound.

In the fourth quarter, the overall trade deficit on goods and services climbed to £13.5 billion from a revised £12.7 billion in the previous three months. Over the period the volume of UK exports rose by a meagre 0.4 per cent after the impact of persistent VAT fraud is stripped out. Economists said the poor showing will mean that net trade subtracted about 0.2 percentage points from Britain’s growth in the fourth quarter.

For 2006 as a whole, the global good and services deficit hit £55.8 billion, up from £44.6 billion in 2005, to its worst cash value since record begun in 1697. This was despite a £28.5 billion record surplus in services trade.

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