A GROWING TRADE DEFICIT
THE UK NOW IMPORTS GOODS WORTH £131 BILLION MORE THAN IT EXPORTS
THE UK’s trade deficit has widened dramatically over the last two decades.
A trade deficit is when the value of imported goods exceeds the value of exported goods.
Essentially, it means the
UK is spending more on buying goods than it makes from selling them.
Latest figures from the
ONS reveal that the country had a goods deficit of £130.7 billion in 2017.
Nearly two decades ago - in 1998 - that figure stood at just £14.7 billion, once inflation is taken into account.
The figures show that nearly threequarters of the UK’s goods deficit last year related to trade with the EU.
In all, we imported £93.7 billion more from Europe than we exported to Europe. Our trade deficit with non-EU countries, meanwhile, stood at £37.0 billion.
It is a far cry from two decades ago, when we actually had a trade surplus with the EU - exporting £4.5 billion more than we imported.
The UK is currently in a customs union with the rest of the EU.
That works to facilitate free trade by ensuring all member states apply the same import duties on goods entering the union.
Countries also agree not to impose tariffs on goods travelling between countries in the EU.
The result is that goods can travel freely once inside the zone where the customs union applies.
Currently no deal is in place for the UK to maintain all or part of the customs union once the country leaves the EU in March 2019.
The figures show that back in 1998 the UK had a trade surplus in goods with nine EU countries.
That had shrunk to just four by 2017.
Our largest trade deficit in 2017 was with Germany (£31.7 billion) followed by the Netherlands (£18.5 billion) and Belgium (£11.4 billion).
We had the biggest trade surplus with Ireland last year (£6 billion), Malta (£0.3 billion) and Cyprus (£0.2 billion). Of the three countries we had the largest deficit with, imports of machinery and transport were largely responsible for the widening gap. Our trade deficit with Germany for machinery and transport alone was just £3.9 billion in 1998 - but £21.7 billion in 2017.
Recently the German Economic Institute said that if Britain quits the EU without a trade deal in place, their exports to Britain might drop by up to 57 per cent.