As much as falling oil prices have hurt fortune 500 energy companies to the tune of more than $95 billion, it has on the other hand narrowed UK trade deficit to its lowest since 2013. UK’s deficit on trade in goods and services was estimated to have been £ 1.4 billion in November 2014, compared with £ 2.2 billion in October 2014.

The UK`s Office for National Statistics (ONS) data reflects a deficit of £ 8.8 billion on goods which is partly offset by an estimated surplus of £ 7.4 billion on services. The UK is essentially one of the world`s leading exporters of financial services.

According to The City UK, the value of the UK`s trade surplus in financial services is double that of the next largest country's trade surpluses recorded by Switzerland, the US and Luxembourg.

However the compression of trade deficit was as a result of a fall in imports of goods rather than an increase in exports. Between October and November 2014, exports of goods fell by £ 0.1 billion to £ 24.4 billion. The falling of oil prices has recorded a £ 0.7 billion positive trade balance as imports of goods fell by £ 1.1 billion to £ 33.2 billion over the same period.

Trade gap is a concept that shows the difference between the values of goods and services a country exports around the world against the value of its imports.

In three months ending November 2014, the UK`s trade in goods deficit narrowed by £ 2.5 billion to £29.2 billion.

Regardless of how the UK has diminished its trade deficit, it has recorded its largest ever trade deficit in goods with Germany amounting to £ 7.8 billion. This situation reflected a decrease in exports and a slight increase in imports.

The decline of oil prices at the international market since last summer positively contributed to UK trade deficit. The prices of crude oil has fallen below $50 per barrel; the lowest it has reached since 2009 thanks to high global supply spurred by US shale boom in addition to decline in oil consumption in Asia and Europe.

The ONS confirmed on Friday at the release of the data that the decrease in fuel imports could almost entirely be attributed to trading partners located outside the European Union. Markit chief economist Chris Williamson was quoted by Digital Look as saying that exports have disappointed due primarily to weak demand from UK`s trade partners.

On the other hands, Williamson pointed out that statistics showed that manufacturing output had stagnated in both Germany and France. This trend affects UK`s trade balance as the two countries are important destinations for UK exports.