How will Brexit impact the UK’s trade? It’s the question burning in every businessperson’s mind, and it doesn’t seem to be getting an answer any time soon.
According to the Independent, many companies are struggling to decide on importing and exporting in light of confusion over the direction Brexit will take businesses. But what is the current state of the nation’s trading with the wider world?
In this article British brand Gola, that is renowned for its silver trainers, take an in-depth look at the UK’s imports and exports, from the items we sell the most of to what we’re buying in, as well as which countries are our top import and export locations…
The key terms to know!
Before we delve further into what the UK has to offer in terms of trade, let’s break down some of the terminology:
- Single market — The European Single Market is a single market that guarantees the free movement of goods, services, capital, and labour within the EU.
- Customs Union — A customs union is where a group of states or countries agree to charge the same import duties to each other.
- Import and export — an easy one to start with, imports are items and goods we buy into the country. Exports are items and goods we sell to other countries.
- Trade deficit and trade surplus — these two terms come under the umbrella of the balance of trade. It is essentially the difference between monetary value of a country’s exports and imports. If a country is importing more goods than it is exporting, then the country has a trade deficit. A trade surplus occurs if a country is exporting more than it is importing. Generally, a trade deficit is considered concerning as it is seen as the country being unable to produce enough goods to supply its people, requiring them to import more.
- “Special relationship” — The oft-cited “special relationship” with the US boils down to our trade relationship. In 2016, the UK exported £100 billion worth of goods and services to the US, running a trade surplus with the US of £34 billion.
It is important to note that, regarding the “special relationship” with the US, the UK does export more to the US than any other country. However, when considering the EU as a whole with the same trade laws etc, rather than 27 separate countries, the EU imports more from the UK than the US by far.
What does the UK export?
According to the Observatory of Economic Complexity (OEC), in 2016 the UK’s top export item was cars, which accounted for 12% of the overall $374 billion export value that year.
Other popular UK products were gas turbines (3.5%), packaged medicaments (5.2%), gold (4.0%), crude petroleum (3.4%), and hard liquor (2.1%). We also export a fair amount of food and drink, with items such as whisky and salmon popular abroad.
The BBC also points out that exports and imports are not just physical goods. In this digital age, it’s easier than ever to offer services as exports too, and the UK does just that, via financial services, IT services, tourism, and more.
Where exactly is the UK exporting to?
In 2016, our top export destinations were:
- United States (14%)
- Germany (9.5%)
- The Netherlands (6.0%)
- France (6.0%)
- Switzerland (5.1%)
China, one of the countries the UK is eyeing up for a potential trade deal after Brexit, accounted for 5%. Again, it is worth considering that Europe as a whole accounted for 55% of our top export destinations.
What does the UK import?
We are importing rather similar items as we’re exporting. Top imports into the UK in 2016 included gold (8.2%), packaged medicaments (3.1%), cars (7.8%) and vehicle parts (2.5%).
Where does the UK import from?
For 2016, the top origins of the UK’s imported products were:
- Germany (14%)
- China (9.8%)
- United States (7.5%)
- The Netherlands (7.3%)
- France (5.8%)
The UK’s trade deficit and trade surplus
Despite our popular products, the nation is sitting with a trade deficit to the EU — we import more from the EU than we sell to the EU. In 2017, we exported £274 billion worth to the EU, and imported £341 billion’s worth from the EU. In fact, the only countries in the EU that bought more from us than we bought from them were Ireland, Sweden, Denmark, and Malta. Our biggest trade deficit is to Germany, who sold us £26 billion more than we sold to them.
The UK also has a trade deficit with Asia, having sold £20 billion less in goods and services than we bought in.
As previously mentioned, we have a trade surplus with the United States, as well as with Africa.
A trade deficit is generally viewed in a poor light, as it is basically another form of debt: the UK imported $88.4 billion from Germany in 2016. Germany imported $35.5 billion from the UK, making a difference of $52.9 billion owed by the UK to Germany.
With uncertainty abound about the impact of Brexit on imports and exports, it remains to be seen how UK businesses will continue to trade abroad, and if focuses will shift.