British sportswear brand Gola are known around the world for their women's silver trainers and other athletic products. They are one of many UK companies that could be affected by outcome of the Brexit negotiations. In this article, they help up take a in-depth look at the import-export business.
How will Brexit affect our ability to trade with other nations? Should British companies jump ship and mover their operations overseas? Questions like this are no doubt on the minds of thousands of business people, yet there doesn't seem to be a clear answer. According to the Independent, many companies are struggling to decide on importing and exporting due to confusion over the direction Brexit will take businesses.
Some Key Phrases
Import & export can be a confusing topic, so before we continue it's useful to clarify a few key terms and phrases:
- Import and export - this one's nice and simple - imports are items and goods we buy into the country. Exports are items and goods that we sell to other countries.
- Trade deficit and trade surplus - these two terms come under the umbrella of the "balance of trade". It is basically the difference between how much a country imports compared to how much it exports, in monetary value. If a country imports more than it is exports, then the country is said to have a trade deficit. A trade surplus occurs if a country is exporting more goods than it is importing. A trade deficit is usually a cause for concern, as it suggests that a country can't produce enough goods to support its people and is dependent on other nations.
- The Special Relationship - You may have heard this mentioned a lot in the media - the "special relationship" between the UK and the USA. This usually refers to our trade relationship. In 2016, the UK exported around £100 billion worth of goods and services to the US, running a trade surplus with the US of £34 billion.
- Single market - The European Single Market is a single market that allows 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.
Economists often treat the EU as a whole, rather than 27 separate member states, when discussing things like trade and GDP. When you look at it this way, the EU imports far more from the UK than it does from the United States. That said, the UK exports more to the US than it does to any other country.
What exactly are we exporting?
In 2016 the UK's number 1 export was cars, which accounted for 12% of the total $374 billion export value that year. One of example of this is the world-famous Mercedes-Benz, who offer a number of Mercedes finance plans.
As well as motor vehicles, other popular UK exports included gas turbines (3.5%), medical products (5.2%), gold (4.0%), crude petroleum (3.4%), and hard liquor (2.1%). We also export a large number of food & drink products, such as Scottish whisky and salmon.
Finally, let's not forget the UK's booming service industry - which includes digital products, financial services, IT services and tourism.
Who do we sell to the most?
In 2016, the UK's top export destinations were:
- United States (14%)
- Germany (9.5%)
- The Netherlands (6.0%)
- France (6.0%)
- Switzerland (5.1%)
When considered as a whole, the EU accounted for a whopping 55% of our exports. China didn't quite make the top 5 (at 5%), but it's one of the countries we are eyeing-up for a trade deal post-brexit.
What do we import?
Our imports are pretty similar to what we export. Top imports into the UK in 2016 included gold (8.2%), medical items (3.1%), cars (7.8%) and vehicle parts (2.5%).
Who do we import the most from?
For 2016, the top origins of the UK's imported products were:
It's worth noticing that we buy more form the EU than we sell to them. In 2017, we exported £274 billion to the EU, and imported £341 billion from them. The only countries in the EU that bought more from us than we bought from them are were Ireland, Sweden, Denmark, and Malta. Our biggest trade deficit is with Germany, who sold us £26 billion more than we sold to them.
The UK also has a trade defect with the United States as well as Africa and Asia.
As we mentioned before, a trade deficit is seen as a negative, as it basically boils down to a type of debt. We bought $88.4 billion of goods from Germany in 2016 but only sold $35.5 billion back to them - putting our "debt" at $52.9 billion.
With all the uncertainty surrounding Brexit, it remains to be seen how British businesses will continue to trade abroad, and if focuses will shift.
