Foreign Trade

The UK is a far from being an isolated self-sufficient country; instead it engages in a substantial amount of trade with the rest of the world. In the last century Britain held a dominant position in world trade, especially in the export of manufactured products. A hundred years ago the UK supplied almost 40 per cent of such exports. Britain’s share fell to less than 7 per cent towards the end of the 1980s but picked up marginally in the 1990s. The UK is now but the fifth most important nation in world trade in terms of total exports and imports - following the USA, Germany, Japan and France. More relevant, in some ways, however, is the role imports play in the UK economy. About a quarter of all goods and services consumed in Britain are made up, directly or indirectly, of imports. This underlines the key place of foreign trade in the economic life of the country.

Commodity composition. The traditional picture of Britain in the world economy in the past was characterised by great dependence upon foreign sources of supply for essential raw materials and foodstuffs, paid for by the export of manufactured products. This is no longer the case. The importance of primary products in the import bill has greatly diminished as a result of many factors, including the development of synthetics and the decline of some raw-material-using industries, such as textiles.

The geographic distribution of trade. Before the Second World War, the countries in the Commonwealth were the UK’s major trading partners. Now the countries of Europe occupy the dominant position, accounting for about two-thirds of UK imports and exports. By far the most important are the nations that are in the European Community (EC).

The Balance of Payments. Imports and exports of tangible goods are not the only transactions that the UK engages in with other countries. There is also a considerable trade in services. Such trade is known as ‘invisible’, in contrast with the ‘visible’ trade in physical commodities. Invisible earnings arise as returns on overseas investments, from the services of financial institutions, from tourism and other sources. Their importance for this country’s balance of payments arises from the fact that the UK has a deficit on visible trade, partly (sometimes wholly) financed by a surplus on invisible items.

The net result of both visible and invisible balances is known as the ‘current account’ balance of payments. There is also a capital account, which records international capital transactions - lending and borrowing both short-term and long-term. At the present time capita flows are two-way, but very substantial. The British currency is the pound sterling. They do not use the Euro. A few of the big shops will accept Euro, it is rarely used across Britain.

Notes*

self-sufficient, adj. – самостійний marginal, adj. - крайній, скрайній relevant, adj. - доречний, релевантний to diminish, v. - зменшувати, ослаблювати transactions, n., pl. - угоди, операції to be engaged in with - бути задіяним в…

short-term, adj. - короткотривалий; long-term, adj. – довготривалий to go borrowing - просити позичку lending - надання позики to record, v. - записувати, реєструвати a surplus, n. – надлишок staple commodities - основні товари

Talking points*

How important is the UK in the world trade?

What’s commodity composition?

How is the British trade geographically distributed?

In what way is the balance of payments provided?

Unit 6

Дата добавления: 2015-08-18