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bogbrush

Balance Of Trade Loss Reduces

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The perpetual red ink in the nations Profit and Loss account continued in May, albeit at a lower rate than usual.

http://www.statistics.gov.uk/cci/nugget.asp?ID=199

Highlights;

Deficit on trade in goods and services was £2.2 billion in May, compared with the deficit of £3.0 billion in April (the same as originally published).

Surplus on trade in services was £4.1 billion, the same as in April.

Deficit on trade in goods was £6.3 billion, compared with the deficit of £7.1 billion in April. Exports fell by £0.2 billion, while imports fell by £1.0 billion.

So better news, but driven by a reduction in imports (reflecting a drop in domestic demand). No goods news on exports despite the devaluation. One only can imagine what the carnage would have been had we been in the Euro. Physical trade remains a sick joke and despite everything else it still looks like the nation depends on the financial sector. That, and dressing up as Beefeaters for tourists. :(

But GB plc made another loss in May to add to the losses made every month for absolutely ages now. Nobody seems bothered about this; am I being too simplistic in seeing this as one of the fundamental problems that means Britain is basically screwed?

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The perpetual red ink in the nations Profit and Loss account continued in May, albeit at a lower rate than usual.

http://www.statistics.gov.uk/cci/nugget.asp?ID=199

Highlights;

So better news, but driven by a reduction in imports (reflecting a drop in domestic demand). No goods news on exports despite the devaluation. One only can imagine what the carnage would have been had we been in the Euro. Physical trade remains a sick joke and despite everything else it still looks like the nation depends on the financial sector. That, and dressing up as Beefeaters for tourists. :(

But GB plc made another loss in May to add to the losses made every month for absolutely ages now. Nobody seems bothered about this; am I being too simplistic in seeing this as one of the fundamental problems that means Britain is basically screwed?

No your not. And yes it means we are screwed as we sell off bits of the uk and climb further into debt to cover these losses.

Unfortunately our political elite seems to neither know nor care. And has made no effort whatsoever on either side of the political spectrum to reverse this trend via the many policy tools available.

Additionally a large part of the imbalance arises through the merchantilist policies of germany, japan, and china. I have to ask, why the hell has successive uk governments never made any attempt to counter these??

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Seems like the indifference to the thread reflects the general indifference to the Balance of Trade, thereby the thread has proved its own point. :lol:

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Additionally a large part of the imbalance arises through the merchantilist policies of germany, japan, and china. I have to ask, why the hell has successive uk governments never made any attempt to counter these??

In the long run, having an independent floating currency is a counter. Philosophically we claim to be a free-trading nation, and that tariffs and barriers are self-destructive. We shall see.

In the meantime I make it that our monthly national overspend comes to about £33 per head. Shouldn't be too much trouble re-balancing that, should there? Though obviously if we shrink our demand, demand in our trading partners will shrink too.

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So better news, but driven by a reduction in imports (reflecting a drop in domestic demand). No goods news on exports despite the devaluation.

...or import substitution by UK suppliers. The pound's devaluation makes our imports more expensive so this rapid fall in the import bill is more significant than it appears. Usually when a currency devalues the trade balance initially gets worse due to the cost of imports rising faster than export prices. The deficit then gradually improves due to increased sales of cheaper exports and substitution of more expensive imported goods. This is known as the J-Curve:

http://www.economist.com/research/Economic...fm?TERM=J-CURVE

The shape of the trend of a country's trade balance following a DEVALUATION. A lower EXCHANGE RATE initially means cheaper EXPORTS and more expensive IMPORTS, making the current account worse (a bigger DEFICIT or smaller surplus). After a while, though, the volume of exports will start to rise because of their lower PRICE to foreign buyers, and domestic consumers will buy fewer of the costlier imports. Eventually, the trade balance will improve on what it was before the devaluation. If there is a currency APPRECIATION there may be an inverted J-curve.
One only can imagine what the carnage would have been had we been in the Euro.

Indeed.

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