The Case for a Possible Brexit and Its Impact on the Uk Economy

1602 Words Apr 25th, 2016 7 Pages
The case for a possible Brexit and its impact on the UK economy is one that has been widely discussed over the years, given the significant economic effects it imposes on both parties involved. The UK taking up its membership into the EU in 1973 following its establishment in 1967 enabled vast benefits of free trade to be shared amongst members of this trading bloc. However, over a quarterly time series from 1999 to 2014 the UK has been noted to have run a relatively large balance of trade deficit in terms of its trade in goods with the EU (see figure 2), and as such lays emphasis on the UK’s lack of competitiveness, specifically in its manufacturing industry.

The importance of the EU has increasingly become more significant in terms of
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With regards to the UK’s total trade in goods with the rest of the world, an increase in the balance of trade deficit of 103.8% from 1999 to 2014 was also recognised. From figure 3, the largest deficit occurred in Q3 of 2011 with a value of -£15997 and the smallest in Q2 of 1999. Figure 3: ONS

Although the UK experienced a persistent deficit in terms of its total trade with non-EU countries and the EU, its deficit with non-EU countries were less significant in terms of its magnitude when compared with countries within the EU. This could further be examined using the gradient from each graph from figure 2 and 3. The gradient in figure 2 at -245.03 being steeper than that of figure 3 signifies a greater balance of trade deficit with the EU.

In the evaluation of the quarterly time series, it could be stated that the current account might not necessarily be a good measure to analyse the importance of the EU as a trading partner because the UK is not an export-led country of goods and so it would be wrong to compare it with other EU countries that have surpluses in their balance of trade. From figure 2, the UK was seen to have had a persistent balance of trade deficit with the EU as imports were increasing by 4.98% and exports by 2.79% per annum. This makes the UK seem relatively uncompetitive when compared to other members of the EU such as Germany and Belgium who are net exporters of goods and therefore are able to achieve surpluses of €44.6 billion and

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