British Trade Deficit Soars to $4.4 Billion; Stock Prices Tumble
LONDON — The government announced a record trade deficit of $4.4 billion for October, triggering an increase in interest rates as stock prices plummeted today.
The worst trade figures in British history were twice as bad as analysts had predicted and immediately caused panic on the London stock market. The Financial Times-Stock Exchange 100-share index closed down 38.3 points at 1,794.7, an improvement over the session low of 50.5 points down.
The Bank of England responded swiftly as stock prices tumbled, raising interest rates at midday by 1%, to 13%.
The Treasury Ministry said the October trade figures were distorted because of September’s postal strike. In an attempt to minimize the effect of the strike on the September trade figures, Customs officials had shifted $183 million of October’s export trade to the September figures, which proved to be an overcompensation.
The September deficit stood at $1.02 billion.
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