The deficit is the difference between what a nation earns in taxes on goods, services, incomes and corporate profits and what the country spends (defence, health care, education etc.). A nation may not run a deficit, so the deficit is added to the “stock” of a country’s national debt, increasing the interest that it must pay to its creditors. Ideally, a nation wants to be running a surplus which would eventually (think almost geological time scales here…) clear the national debt and eliminate interest payments on it.

The UK has run its worst ever trade imbalance with the rest of the world in 2015, according to the Office for National Statistics (ONS). The nation imported £125 billion more worth of goods than it exported to the rest of the world, an increase of £1.9 billion and more than previously anticipated. The trade imbalance is likely to have a negative effect on Q4 GDP when the second estimate is disclosed towards the end of February. The initial reading of Q4 growth was 0.4%.

A relatively strong Pound will have harmed the competitiveness of UK exports (notably in the Eurozone). It strengthened by 6.2% against the Euro last year, but eased against both the Dollar and the Yen (by 4 and 3.7%, respectively), but the real culprit is probably weak global demand.

The UK service sector did well, recording a record surplus if £90 billion which meant that the overall trading deficit came in at £300 million while the trade deficit per se was £34.7 billion. The weak oil price has meant that the import bill has been lower (but receipts for UK North Sea oil are lower, of course). Oil imports were at their lowest value February 2009.