LONDON, Feb 12: With its trade gap widening to £56 billion in 2006 the UK experienced what is seen here as the worst year of trade deficit in over 300 years or precisely since 1697 when figures for imports and exports were first collected.

The latest figures show that the £1.8 billion surplus in 1997 became a £7.1 billion deficit in 1998 and the gap has kept on widening every year since. Officials have yet to work out the 2006 deficit as a proportion of the economy but it is certainly expected to be well in excess of 4 per cent of the GDP.

Only the strength of Britain's service sector saved the country from an even worse performance in 2006. The deficit in goods alone - primarily food, oil and manufactured goods - stood at a record £84.3 billion last year, up from £68.8 billion in 2005. The goods deficit is running at about 6.5 per cent of GDP.

Up until 2006, the worst year on record for visible trade w as 1974, when the four-fold increase in the price of oil following the Yom Kippur war and the three-day week left Britain with a trade deficit of 6.3 per cent of GDP.

The same year saw the record deficit for goods and services - 4.9 per cent of GDP. That is unlikely to be surpassed this year, although a further deterioration in 2007 would make a deficit of 5 per cent of GDP a possibility. Part of the deficit in goods was offset by a record performance by the service sector, where the 2005 surplus of £24.2 billion was beaten by a record £28.5 billion surplus in 2006.

The bad news on the trade front continued right up until the end of the year with a surge of imports to meet consumer demand over Christmas and the impact on exports of the strong pound combining to produce a larger-than-expected deficit in December alone.

The UK ran a trade deficit with every one of its G7 partners apart from the United States in 2006, figures showed. The deficit in goods with Germany was £15.5 billion, with Japan £3.8 billion, with Italy £3.7 billion, with France £1.6 billion and with Canada £1.1 billion. There was also a £12 billion goods trade deficit with China.

Britain's increasing dependency on imported oil, as supplies from the North Sea run out, has been one factor in the deterioration, with a surplus of £900 million in 2004 becoming a shortfall of £3.7 billion last year. The price of crude oil - just above $30 a barrel before the invasion of Iraq in 2003 – was on Saturday hovering just below $60 after a cold snap in the US.

One success for the government during the course of 2006 has been the crackdown on so-called missing-trader fraud, a scheme by which fraudsters illegally reclaim VAT by continually importing and exporting the same goods. Missing-trader fraud peaked at £5.7 billion in March last year but dropped to £100 million by December.