Britain’s Trade Shortfall Soars to $3.25 Billion

Britain’s balance of payments deficit in July soared to $3.25 billion, its second worst monthly figure ever, the government said today.

The deficit compared to a shortfall of $2.5 billion in June and its size surprised economic analysts, who had forecast an improvement.

The figure was a blow to government hopes that the trade deficit had taken a decisive downturn as a result of its policy of pushing interest rates upward to cool the economy.

The Labor Party viewed the deficit as a sign of failure by the Thatcher government and Chancellor of the Exchequer Nigel Lawson, who engineered the interest rate policy.

The scale of the deficit had an immediate effect on sterling, which slid 1.5 cents against the dollar to 1.5760.