by Sofia Lotto Persio

BRITAIN’S economy faces “immense challenges,” as a weakened pound has failed to boost exports after the EU referendum.

August economic data from the Office for National Statistics released yesterday shows that the trade deficit has increased to £2.5 billion.

Exports only grew by £100 million, while imports rose by £2.6 billion.

A weaker currency would be expected to help exports as these become cheaper and therefore more competitive in the international markets.

But while British services exports continued to grow, goods were down — particularly in ships and oil.

Trade figures with the EU also show that imports increased by 5.1 per cent while exports declined by 0.6 per cent.

Shadow chancellor John McDonnell said: “Today’s trade and manufacturing figures demonstrate the immense challenges facing the UK economy after years of Tory failure.

“The widening trade deficit, sluggish growth in exports and falling manufacturing output despite the weakening pound all highlight the recklessness of a Tory government that failed to plan for a Brexit vote and which continues to have no answers to the challenges facing the UK economy.”

The pound sank to a new low on Tuesday as the government revealed its Brexit timeline at the Tory Party conference.

Adding to the currency fluctuation, the pound lost 6 per cent of its value yesterday morning trading in the Asian markets.

According to market analysts, an algorithm would have picked up on headlines about a “hard Brexit” — involving an exit from the single market and tightened controls on immigration — and triggered a sell-off of the currency.

The Bank of England said it is “looking into the cause of the sharp fall.”

The pound is currently worth $1.24, a 31-year low, and €1.11, a five-year low.

The International Monetary Fund expects Britain to be the fastest-growing economy in the G7 this year with a 1.8 per cent growth rate, but it downgraded the 2017 growth forecast to 1.1 per cent.