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uk

UK Trading Position

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UK Trading Position

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Imports

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Imports
• The purchase of goods and services by UK
residents from abroad
• Imports represent a debit on the balance of
payments account
• Imports may be purchased because:
– They are better quality than those existing in the UK
– They are not capable of being produced in the UK
– The cost of production is lower than similar items
produced in the UK
– The service associated with such items may be
better abroad than from UK producers

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Exports

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Exports
• Exports are the sale of goods and
services by UK residents to foreign
buyers
• Exports represent a credit on the
balance of payments accounts
• The level of exports may be dependent
on the competitiveness of UK producers
in comparison to those abroad

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Trade

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Trade
• Trade not only occurs in goods and
services but debits and credits are also
recorded as a result of financial
transactions, e.g.
– Buying and selling of shares
– Buying and selling of currencies
– Buying and selling of bonds, financial
derivatives, forward contracts, etc.
– Movements of funds by governments and
financial institutions – gold, Special Drawing
Rights (SDRs), etc.

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Goods

Main categories of goods traded:

• Food, beverages and tobacco
• Oil
• Basic materials
• Coal, gas and electricity
• Semi-manufactured goods
• Finished manufactured goods

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Semi-manufactured goods

• Goods having gone through a

manufacturing process but which are
purchased to contribute towards other
manufacturing processes:
• Chemicals
• Precious stones and silver

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Finished manufactured goods

• Cars
• Consumer goods
• Capital goods
• Ships and aircraft
• Intermediate goods

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Services
• Services sometimes referred to as
‘invisible trade’
• Purchase and sale of services an
increasingly important component
of UK trade
• Main categories of trade in services
comprises:

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Services
• Transportation • Financial
• Travel • Computer and
• Communications information
• Construction • Royalties and
• licence fees
Insurance
• Personal, cultural
and recreational
• Government

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Reserve assets

• Assets held by UK government and may

be used in part to help correct balance
of payments positions:
• Gold
• SDRs – Special Drawing Rights held at
the International Monetary Fund (IMF)
• Foreign Exchange

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Competitiveness

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Competitiveness
• UK trading position heavily reliant on
the changing nature of competitiveness
across the globe:
• e.g the rise of countries like China and
India – manufactured goods, call
centres, etc.
• Has an impact on UK trade – what we
trade, how much we trade and who with

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Competitiveness
• Factors influencing international
competitiveness important:
– Level of domestic inflation in relation to our
trading partners
– Level of UK productivity in relation to
trading partners
– Level of investment in physical and human
resources influences competitiveness
– All affect the unit cost of production

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Regional Trade

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Regional Trade
• Importance of monitoring who we
trade with, how this is changing
and why?
• Helps identify changing global
trading positions and conditions
and how the UK might be able to
influence this

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