The Eu And Uk 's Trade Essay

1024 Words Mar 13th, 2016 null Page
The EU and UK are undeniably close trade partners seeing as the EU makes for a large proportion of trade deficit with the UK as of 2014. Nonetheless, strong economic growth in many non-EU emerging economies has resulted in important trade activity with these non-EU countries, eating into proportion accounted for by EU since 1999, despite the value of EU trade increasing. The sheer growth in UK’s trade volume is reflected in the downward trend in Graphs 1, 2, & 3 below.
Considering the total current account balance (Graph 1), UK’s trade deficit has been in decline from 1999 to 2014, with exceptional peaks in 2001, 2006, and 2011. The same pattern is observed in UK’s total trade in goods with the EU (Graph 2). Faster growth in the UK’s terms of trade with the EU deteriorated UK’s overall trade balance with the EU, and significantly widened trade deficits (ONS, 2015). The inference is the high proportion of UK-EU trade is strongly reflected in the current account balance and hence has huge contributions to UK’s trade balance on the whole. The peaks which can be accounted for by neoliberal policies and weakening of the sterling (Pimlott, 2009 and Cadman, 2015) were followed by severe worsening in deficits. This says something about the effectiveness and sustainability of fiscal and monetary policies to improving terms of trade.

In spite of that, UK’s improving balance of total trade in goods with the rest of the world somewhat cushions the current account deficit. The choppy…

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