Britain's trade deficit widened in February due to a sharp decline in the export of goods.

The Office for National Statistics (ONS) said the deficit stood at £2.4 billion for the month, compared with the £1.8 billion registered in January.

Data revealed the deficit for the trade in goods widened to £3.7 billion, up from £3.2 billion in January and ahead of City forecasts of £3.3 billion.

Excluding oil and other erratic items, the trade deficit at £4 billion was the worst since records began.

Total exports of goods fell five per cent to £14.8 billion and total import of goods fell 1.5 per cent to £18.5 billion.

Economists have predicted the trend will continue through 2003, given the weak global environment and relatively robust domestic demand.

John Butler, chief economist at HSBC, said: "These numbers are fairly volatile month-on-month but the trend is quite clearly one of a widening trade deficit."

Economists also questioned whether a further widening of the trade deficit would prompt the Bank of England to make a further cut in interest rates.

But Mr Butler said the news did not justify fresh rate cuts when the Monetary Policy Committee meets today.

He said: "The rate cuts would actually prove counter-productive, doing little to boost global demand and reigniting domestic demand."

The ONS figures showed geographically, most of the fall in exports was to the US and Asia, while exports rose to the big three eurozone countries - Germany, France and Italy.

Export prices were shown to have risen by three per cent in the past year but the data showed that was caused mainly by the pick up in oil prices.

Excluding oil, which saw soaring crude oil prices during the build-up to the war, export and import prices are still falling.

Exports have been hit by the global slowdown, the relative strength of the pound and by competition from developing countries.

The pressure has damaged Britain's manufacturing industry, leading to factory closures and thousands of job cuts.

Shadow trade and industry secretary Tim Yeo said: "The latest figures are yet another damaging addition to this Government's downgraded economic reputation.

"Sadly a Government which daily adds to the burdens on business and erodes our competitive position shows no sign of either heeding the danger or tackling its causes."