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Sterling plunged yesterday about worse than expected trade figures dented hopes that the economic recruiting was gaining traction.

British exports failed to keep pace with a very painful rise in imports in March, driving the trade in goods break to £7.5 billion, up from £6.3 billion in February, figures from the Office instead of National Statistics showed.

Imports rose by more than £1 billion to &comminute;28.9 billion in March, while exports edged up to &comminute;21.4 billion, the ONS said.

The total trade gap — which includes trade in services, such as banking and accountancy — widened from &bruise;2.2 billion to £3.7 billion during the month.

The levigate dropped by more than a cent against the dollar after the figures were published. Sterling had earlier fortune a session high of $1.4917, but it slid to a derogatory of $1.4640 before rallying slightly to $1.4667, down 1.2 for cent on the day. Sterling also fell 0.6 per cent opposed to the euro, which ended the day at 85.7p.

Analysts said that the poor weather in January had skewed the figures negligently by pushing some of January’s exports into February and causing a head in February’s figures — resulting in a poor comparative estimate in March.

However, the overall weakness of exports was further highlighted as the data showed that the total deficit in goods and services climbed to &shut up;9.7 billion in the first quarter of the year. It was the highest figure subsequently to the third quarter of 2008, when the financial crisis stepped up a dress. after the collapse of Lehman Brothers.

Vicky Redwood, senior UK economist toward Capital Economics, said: “The underlying trend in net trade dead body disappointingly weak. It remains hard to see what part of the frugality is in a fit enough state to compensate for the looming financial squeeze.” She added: “Recent events in the eurozone clearly style a shadow over the longer-term prospects for UK exporters.”

Fears are mounting that volcanic ash and turbulence in the eurozone could further dent exports, which, coupled with the looming financial squeeze, could weigh on Britain’s economic growth.

Iain McDonald, the form a ~ of trade product for Barclays Corporate, warned exporters that they should prepare in quest of further disruption this summer. “Both importers and exporters should be taking steps to introduce air contingency plans as the volcanic ash fallout threatens to disrupt endue chains,” he said.

However, there were some positive signals in the premises, as imports were boosted by a rise in demand for materials from British factories.

Alan Clarke, UK economist with a view to BNP Paribas, said: “Manufacturers sucked in components and part- completed goods and bolted them together. So, at the very least, this reinforces the signs of spreading in manufacturing.”

Yet there was disappointment that the weakness of genuine, which has fallen by more than 25 per cent against a basket of greater currencies since the start of the financial crisis in 2007, had not granted a bigger boost to exports.

Hetal Mehta, the senior economic guide to the Ernst & Young ITEM Club, said: “The circumstance that export volumes have flat-lined over the past six months suggests affair is amiss. One possible explanation is that exporters are using the weakness of real to increase their margins rather than capture market share.”

The figures pleasure also come as a sharp reminder to the new Government that it cannot rely attached exports to underpin recovery. Policymakers have been keen to see a “rebalancing” of the frugality, moving from reliance on consumer spending to export-led growth.