Britain's trade gap widened to a record £34.3 billion last year as exports continued to take a hammering, figures showed.

Data from the Office for National Statistics yesterday showed 2002 recorded the biggest deficit the difference between what Britain imports and exports since records began in 1697.

Exports in goods during 2002 tumbled to £185.68 billion, £4.37 billion less than the previous year.

Imports also fell, by £3.66 billion to £219.99 billion.

The falls gave a balance of £34.31 billion, wider than the £33.61 billion in 2001.

Exports have been hit by the global economic 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.

Overall, Britain's trade deficit in goods and services narrowed to £21.05 billion during 2002, from £22.31 billion the previous year.

Figures were boosted by an increased surplus on Britain's trade in services, which rose to £13.26 billion from £11.30 billion.

Economists said the record trade gap was "rather less alarming" when viewed as a share of gross domestic product (GDP).

Simon Rubinsohn, chief economist at fund manager Gerrard, said: "For 2002 in aggregate, the goods deficit amounted to 3.3 per cent of GDP.

This compares with a deficit of 3.4 per cent of GDP in 2001 and a high of just short of five per cent of GDP in 1989.

"There can be little doubt that the underlying picture did deteriorate over the course of the past 12 months.

"The reason for the worsening trend is quite simply weak demand in key export markets."

However Shadow Trade Secretary Tim Yeo claimed the figures reflected government policy.

He said: "The worst annual deficit on trade in goods since 1697, driven by falling exports, clearly underlines the serious imbalances within the Britain's economy.

"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."

The data came alongside figures for December which showed an improvement in Britain's trade position, with the goods deficit narrowing from the record £4.1 billion in November to £3 billion.

However Mr Rubinsohn said: "Unfortunately the scale of the decline over previous months suggests that little real comfort can be taken from this improvement."