Introduction:
How long has the UK been in a trade deficit? It's a good question and one that can only be answered by looking at various historical data sets. We'll take a look at the data set from IMF and examine the trade balances between imports, exports, and services between 1850 and 2014.
The UK has been in a trade deficit for many years. In fact, the government's Office of National Statistics (ONS) says that since 2002 there have been more than 35 million more jobs in the rest of the world. The balance between exports and imports is also negative to a large extent.
UK 'trade deficit' is an accounting concept that relates to a situation where the value of imports exceeds the value of exports. It can be a measurement of the size of trade and its health implications, especially in terms of jobs.
The UK has been in a trade deficit with the rest of the world since 2002
The UK has been in a trade deficit with the rest of the world since 2002.
The UK is not alone in this regard. Many other countries have had sustained deficits for many years. The United States, for example, has run up a trade deficit since 1985.
The UK government argues that it cannot account for the fact that there is such a large difference between what it sells and what it buys from other countries. This has led some to conclude that something must be wrong with Britain's accounts or its accounting methods.
The UK has been in a trade deficit with the rest of the world since 2002. The current account deficit (i.e., total trade deficit) has grown by more than a third since then, from £61bn to £90bn. The UK's current account deficit is now one of the highest in the world, and it is projected to rise further over the next five years as a result of Brexit-related uncertainty.
The UK's trade deficit has two main components: goods and services. Goods are all those items that can be bought on credit (debt) and sold for cash; whereas services are all those items that can be consumed but not sold, such as healthcare and education.
Goods exports comprise about 80% of total UK exports, while services exports make up about 20%. There are many reasons why goods exports do not match services imports, including differences in quality between goods sold in different countries and differences between countries' economies at different times since 1970.
It is believed that from the 1500s through to 1950 Britain’s trade position was in surplus.
From the 1500s through to 1950 Britain’s trade position was in surplus. The world economy was expanding rapidly, with the discovery of new sources of raw materials, especially in South America. In fact, between 1500 and 1850 Britain’s share of world GDP rose from 2 percent to over 7 percent.
Then came two major shocks: the wars of religion in France and England; and a series of bad harvests in Europe. These were followed by two centuries of
the economic stagnation that culminated in 1873 when Britain entered into a catastrophic depression.
There was no sign of recovery until 1914 when war again propelled Britain into prosperity. A sudden expansion in world trade followed until 1929 when the Wall Street Crash brought it to an abrupt halt.
The UK has a trade deficit in goods, which means that it imports more than it exports. The most recent trade deficit is thought to be around £60 billion per year or 3% of GDP. The UK has been running a negative trade balance since 1975 - this means that the value of the country's exports is less than its imports.
The current account accounts for all transactions between an economy and the rest of the world. It includes transactions between businesses, households, and governments such as interest payments, investment income, and transfers (such as aid).
Conclusion
I had heard of the UK trade deficit before, but I couldn't remember when it first happened. It seems difficult for me to search for (what year was the UK in a trade deficit?). So, I decided instead to look at the beginning and end date (as opposed to the year). The country trade gap started in 1981 actually, and I was surprised that it happened so late in the 70s. I don't think I would have expected that.
The trade deficit for the UK is currently the worst it has been since 2008. While the government continues to monitor this closely and work to improve this condition one thing Britain remains blessed with is a strong economy; one that many countries envy despite its current woes.
0 Comments