http:// copyright 2005 – biz/ed uk trading position

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Copyright 2005 – Biz/ed

UK Trading Position



Imports



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



Exports



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



Trade



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.



Goods

Main categories of goods traded:• Food, beverages and tobacco• Oil• Basic materials • Coal, gas and electricity• Semi-manufactured goods• Finished manufactured goods



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



Finished manufactured goods

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



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:



Services

• Transportation • Travel• Communications• Construction• Insurance

• Financial• Computer and

information• Royalties and

licence fees• Personal, cultural

and recreational• Government



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



Competitiveness



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



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



Regional Trade



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

http:// copyright 2005 – biz/ed uk trading position

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