The United Kingdom of Great Britain and Northern Ireland imported $663billion of products and materials in 2014, the last full year of available records for British imports. When compared with $472billion of exports, this represents a trade deficit of almost $200billion.
The most significant area for British imports has been cars, with a value of $47.3billion. This, coupled with imports of petroleum gas makes the car industry responsible for about 10% of all UK inbound trade. Surprisingly, the car industry accounts for a very similar amount of exports at $46billion.
Lets look at where these imports come from, and why they happen.
In the last 20 years there has been an explosion of imports from the Far East, because of the vast differences in labour and material costs. In parts of China there are streets and towns dedicated to the manufacture of certain products, and Britain would be one of their key export partners. The amount Britain imports from China is 1.5 times the amount that Britain exports globally.
Importing vs manufacturing
As recently as the 1980s, The UK used to manufacture clothing, electronics, furniture; the majority of items on sale in shops. However, as countries such as China began to throw off the shackles of communism and become more capitalist, their exporting has accelerated rapidly.
Nowadays, manufacturing most products in any great volume is more cost-effective when outsourced to the Far East. This leaves Britain with food and drink as the UK’s biggest manufacturing sector.
Much lament has come from the increase in imports into Britain as we see a decline in UK manufacturing as a negative. However, the advantage with low price imports is that it is easier for distributors and wholesalers. An increase in products on the shelf has led to a shift in attitudes towards high consumerism. This has resulted in a boom in the logistics industry, as more goods need to be transported and stored in the UK.
There is currently a nationwide shortage in warehousing, as the amount of stock being stored and processed continues to increase. The recent EU referendum could also mean fresh trade deals with developing countries such as India and Brazil. This could result in a higher profit margin that a distributor can yield, and this increased buying power could create a domino effect of higher competition and lower retail prices.
The data in this article is taken from the OEC’s UK trade profile, which contains links to other countries’ import and export statistics.