Block Type
Learn Block
Imports and Exports
What is a good?
A good is a physical product that satisfies people wants and needsExamples include computers, furniture and food
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What is a service?
A service is an intangible product or activity that one party offers to another for a fee. Services are non-physical in nature and cannot be stored or owned in the same way as physical goods. It often involves a face-to-face interaction between buyer and seller.Examples include transportation, healthcare and hospitality and tourism
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What are imports?
An import refers to a good or service that is purchased by one country but manufactured in anotherImported goods or services are appealing when domestic industries cannot produce similar items at a low cost or with high efficiency 🛢️ Many countries import oil because they cannot produce it domestically or cannot produce enough to meet the country’s needs
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What are exports?
An export refers to goods and services that are made in one country and sold to buyers in anotherExports can boost a firm’s sales and profits, offering an opportunity to capture significant global market share, however this typically comes with greater expose to financial risk🚜 Many countries export agricultural products because they can produce more than they need, allowing them to meet global demand and benefit from international trade
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Both imports and exports are the oldest methods of economic exchange and together make up international trade.
It’s important to note that companies will often use net exports as a measure of economic activity. This is simply total exports - total imports
Lets have a look at what the UK imported and exported in 2023…
Trade of goods
Cars were the top import (over £40 billion) and export (over £36 billion) for the UK in 20238 out of 10 cars produced in the UK are exported abroad to 130 different markets internationally (SMMT)This is attributed to the increased demand in electric cars as a result of zero-emission vehicle targets recently set by governments around the world and additionally, the easing of supply chain shortages of semi-conductors.Follow the link if you want to learn more about the automotive industry in the UK:
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High imports and exports of medicinal and pharmaceutical products reflects the UK’s strength in the industry and participation in global medical research and development - example?
Refined oil and crude oil were both major importsHowever, this fall in value is roughly 31% for imports and 40% for exports compared to 2022 (ONS)This substantial decrease in linked to the drop in oil and gas priceAlthough, it’s worth reminding that the oil and gas prices sky rocketed in 2022, largely due to the Russian invasion of Ukraine, and that oil and gas exports and imports are still highFor more information on the UK’s trade of goods in 2023, take a look at this ONS review:
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UK trade in goods, year in review 2023.pdf56.4KB
Trade of services
- maybe expand on the different service types
🌍 Who are the UK’s main import and export partners?
We know what types of goods and services the UK trades, but who did they trade it with in 2023? Lets have a look 👀
The UK’s main trading partners often vary year-on-year for several different reasons. Here’s a few recent changes in trading relationships the UK is involved in:
The US has always been one the UK’s biggest trading partner but after the UK’s decision to leave the EU, there’s been an increased focus on strengthening US-UK trade ties as the UK seeks new partnerships outside the EU.The Top US goods exported included oil and gas, nonferrous metal and aerospace products The Top US goods imported included motor vehicles, aerospace products and pharmaceuticals and medicinesThe top traded services were financial services and various other business servicesWorking together to make data sharing easier between businesses, potentially saving UK companies moneyCooperating on critical mineral and clean energyDeveloping and regulating new technologies like AI, 5G, and quantum computingConsidering ways to increase investment in each other’s tech sectorsTo learn about this agreement in more detail:
By country, the US and UK are each other’s main foreign investors.
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In June 2023, the ‘Atlantic Declaration’ was signed between Rishi Sunak and Joe Biden, introducing a renewed partnership agreement between the UK and the US. Some of the main agreements are:
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The UK’s trade with Russia has also reached historically low levels since their invasion on Ukraine in early 2022. The UK government have implemented a number of sanctions on a number of goods, like silver and wood products, fuel imports and iron (ONS).
We will look at these sanctions and the impact of them in more detail in the “Trade Barriers” chapter. Use this link for later on chapter about russia!
Trade with non-EU countries declined by 6.2% in 2023 compared to 2022 (UKICE). A couple of other main factors are China and Norway.
The UK-China trade relationship has changed in recent years due to global politics.Security - the UK became concerned about relying too much on China for important goods and technologies with fears that this dependency could be risky if political tension increasedThe UK’s close allies, particularly with the US, encouraged a more cautious approach to China as western countries grew more worried about China’s increasing global influenceUkraine-Russia conflict - China’s support of Russia during the war made the UK and other countries rethink their dependencies, including those of China. In addition, the conflict highlighted how international tensions can quickly escalate and affect trade. For more information about the China-Russia conflict:
After Brexit, the UK wanted to trade more with China to strengthen non-EU relationships, however, concerns about security and pressure from allies led the UK to reduce its economic ties with China.
Specifically:
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The UK’s trade with Norway has changed considerably in recent years, largely because of gas prices.Between 2021-2022 the UK’s trade value with Norway increased substantially as a result of the sharp rise in gas prices due to the Ukraine war and energy crisis. The UK paid much more but still received the same amount of gas. For more information: In 2023 the trade value with Norway dropped as gas prices began to return back to normal levels. This led to a big decrease in the value of UK-Norway trade.
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EU countries still make up a significant volume of trade with the UK, specifically 41% of UK exports and 52% of UK imports in 2023 (House of Commons Library).
This statistic could be attributed not the fact that the UK and EU has had a strong growth of trade, but instead because of a large drop in non-EU trade.
We talk about the impact of Brexit in more detail below ⬇️
Recent trends in UK imports and exports
The Brexit Referendum in 2016 was widely talked about around the world and for years after. Brexit led to the UK leaving the EU single market and customs union (these will be discussed in the global trade section). Lets discuss how it impacted the UK imports and exports:
At first glance, it looks as if Brexit had no real impact on the UK imports and exports, however this isn’t necessarily the case.
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COVID-19 Pandemic
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The Fraser of Allander Institute investigates the effects of both Brexit and COVID on Scottish businesses and economy. Take a look:
⚖️ Trade deficit, surplus or balance?
So, we’ve observed the UK sells fewer goods than it buys (deficit in goods) but it sells more services than it buys (surplus in services). The goods deficit is larger than the services surplus, leading to an overall trade deficit.
Several other countries around the world also operate in a trade deficit. For example, the United States has run a trade deficit since 1975 and in 2019 stood at $576.9 billion according to the US Census Bureau (BEA).