Bloomberg is reporting

Europe recorded the biggest trade deficit in 2008 since the euro’s introduction 10 years ago as higher oil prices boosted energy costs and the global financial crisis curtailed exports.

The region’s trade deficit of 32.1 billion euros ($40.5 billion) compared with a surplus of 15.8 billion euros in 2007, the European Union’s statistics office in Luxembourg said today.

The spreading of the global recession is curbing demand for European products, adding to pressure on the economy, which shrank the most in 15 years in the fourth quarter. Volkswagen AG, Europe’s largest carmaker, said deliveries fell about 20 percent last month and that sales in the export markets of Brazil, Russia, India and China have been “particularly hit” by the credit freeze.

Notice the U.S. trade deficit shrank, partly due to oil but is it because we are already so out of balance?

It was decline to China, Russia in exports which caused the biggest trade deficit for the EU.