That’s because the multi-billion dollar trade deficit represents product demand opportunities for exports to the United Kingdom since the UK is a net spender on a specific set of goods highlighted below.
Drilling down from its overall negative balance, the UK performed worst in its international trade with partners from Europe incurring a -$138.5 billion shortfall. Exporters in Asia also profited at the UK’s expense, accounting for a -$36.4 billion trade deficit at United Kingdom’s expense. African exporters also satisfied demand as shown by a -$8.7 billion UK deficit.
Country-specific trade deficits indicate United Kingdom’s competitive disadvantages and areas which foreign business can and do exploit. United Kingdom accumulated the world’s second-biggest trade deficit during 2014.
United Kingdom’s trade deficit in 2014 shrank by 10.9% since 2010 when its negative balance totaled -$205.6 billion.
Product Demand Opportunities for Exports to UK
Top 10
The following list shows the top 10 general product categories under which United Kingdom racked up the severest trade deficits during 2014.
- Electronic equipment: -US$29.7 billion (13.6% of all product deficits)
- Mineral fuels including oil: -$26 billion (11.9%)
- Vehicles : -$22 billion (10.1%)
- Machinery: -$13.9 billion (6.4%)
- Knit or crochet clothing, accessories: -$10.4 billion (4.8%)
- Clothing (not knit or crochet): -$8.7 billion (4%)
- Furniture, lighting , signs: -$7.7 billion (3.6%)
- Plastics, plastic articles: -$7.3 billion (3.4%)
- Wood: -$6.4 billion (2.9%)
- Fruits, nuts: -$5.9 billion (2.7%)
The above top 10 product categories represent 63.3% of United Kingdom’s overall product-category deficit subtotal which amounted to $217.9 billion. For that subtotal, 79 of United Kingdom’s 97 general product categories incurred deficits in 2014 while the remaining 18 categories delivered surplus amounts.
Growth
United Kingdom deepened its trade deficit amounts at the greatest-pace during 2010 to 2014 under the product categories below.
- Manmade filaments: Up 1,011% since 2010 (-US$488.4 million)
- Furskins, artificial fur: Up 831.1% (-$49.1 million)
- Inorganic chemicals: Up 325.9% (-$1.3 billion)
- Explosives, pyrotechnics: Up 132.8% (-$7.9 million)
- Pharmaceuticals: Up 101.7% (-$160.3 million)
- Aircraft, spacecraft: Up 95.5% (-$311 million)
- Arms and ammunition: Up 88.1% (-$34.1 million)
- Milling products: Up 76.4% (-$1.5 million)
- Other animal-origin products: Up 73% (-$14.2 million)
- Woodpulp: Up 68.4% (-$75.8 million)
Detail
From the perspective of the more detailed 4-digit harmonized tariff system (HTS) level, below are 15 products that pushed United Kingdom intothemostcostly deficits versus its international trade partners.
- Phone system devices: -US$10.6 billion
- Computers, optical readers: -$10.4 billion
- Automobile parts/accessories: -$10.1 billion
- Aircraft, spacecraft: -$7.9 billion
- Petroleum gases: -$7.9 billion
- Crude oil: -$7.2 billion
- Processed petroleum oils: -$5.6 billion
- Trucks: -$5.5 billion
- Wine: -$4.3 billion
- TV receivers/monitors/projectors: -$4 billion
- Cars: -$4 billion
- Coal, solid fuels made from coal: -$3.5 billion
- Miscellaneous furniture: -$3.5 billion
- Insulated wire/cable: -$3.1 billion
- Footwear (leather): -$2.6 billion
Among these, aircraft and spacecraft had the fastest-growing UK deficit accelerating by 80,000% since 2010. In second place were trucks up 109.5% while negative net exports for crude oil increased by 53%.
Major Product Demand by UK Supplying Countries
Top 10
The following list presents trade partners with which United Kingdom racked up the highest trade deficits in 2014.
- Germany: -US$48.3 billion (18.7% of UK country-specific deficits)
- China: -$37.9 billion (14.7%)
- Norway: -$21.6 billion (8.4%)
- Netherlands: -$16.8 billion (6.5%)
- Italy: -$14 billion (5.4%)
- Belgium: -$13.2 billion (5.1%)
- France: -$11 billion (4.3%)
- Spain: -$7.5 billion (2.9%)
- Canada: -$7 billion (2.7%)
- Poland: -$6.4 billion (2.5%)
The above 10 trade partners represent 71.4% of United Kingdom’s subtotal deficit of $257.6 billion from the 97 geographic entities with which United Kingdom demonstrated strong import demand .That subtotal excludes the 128 geographic entities with which United Kingdom earned trade surpluses.
Growth
United Kingdom grew its trade deficit amounts with the geographic entities below at the fastest-pace during 2010 to 2014, providing evidence of accelerating demand for exports from these international suppliers.
- Cuba: Up 1,928% since 2010 (-US$39.9 million)
- Solomon Islands: Up 1,553% (-$25.3 million)
- Algeria: Up 1,125% (-$4.7 billion)
- Spain: Up 909.6% (-$7.5 billion)
- Dominican Republic: Up 413.8% (-$98 million)
- Papua New Guinea: Up 288.3% (-$187.8 million)
- Swaziland: Up 287.4% (-$45.6 million)
- Nicaragua: Up 165.1% (-$39.9 million)
- Cambodia: Up 158.1% (-$1.3 billion)
- Bolivia: Up 156.6% (-$47.9 million)
From the above list, United Kingdom mostly showed major product supply disadvantages versus this group of traders with comparatively small populations and for generally small deficit amounts. However, United Kingdom did generate multi-billion-dollar negative trade balances with Algeria, Spain and Cambodia.
Germany
Below are the products that resulted in the greatest UK deficits in international trade with Germany.
- Cars: -US$20.6 billion (42.7% of United Kingdom’s deficit vs. Germany)
- Automobile parts/accessories: -$3.6 billion (7.5%)
- Blood fractions (including antisera): -$2.7 billion (5.5%)
- Trucks: -$1.4 billion (3%)
- Computers, optical readers: -$1 billion (2.1%)
- Piston engine parts: -$966.9 million (2%)
- Printing machinery: -$893.2 million (1.8%)
- Aluminum plates, sheets, strips: -$750.3 million (1.6%)
- Solar power diodes/semi-conductors: -$661.2 million (1.4%)
- Aircraft, spacecraft: -$653.2 million (1.4%)
Among these, solar power diodes and semi-conductors had the fastest-growing UK deficit with Germany swelling by 433% from 2010 to 2014. In second place were trucks up 74.5% followed by aluminum plates, sheets and strips increasing by 60%.
China
Below are the products that resulted in the greatest UK deficits in international trade with China.
- Computers, optical readers: US-$5.6 billion (14.7% of United Kingdom’s deficit vs. China)
- Phone system devices: -$4.6 billion (12.1%)
- Models, puzzles, miscellaneous toys: -$1.9 billion (4.9%)
- Miscellaneous furniture: -$1.5 billion (3.9%)
- Table games, bowling equipment: -$1.4 billion (3.6%)
- Cases, handbags, wallets: -$1.4 billion (3.6%)
- Jerseys, pullovers (knit or crochet): -$1.3 billion (3.3%)
- Lamps, lighting, illuminated signs: -$1.2 billion (3.2%)
- Electric water heaters, hair dryers: -$1.1 billion (3%)
- Seats (excluding barber/dentist chairs): -$1.1 billion (2.9%)
Among these, table games and bowling equipment had the fastest-growing UK deficit with China swelling by 50.1% from 2010 to 2014. In second place were lamps, lighting and illuminated signs up 36.7% followed by phone system devices increasing by 27.9%.
Norway
Below are the products that resulted in the greatest UK deficits in international trade with Norway.
- Crude oil: -US$16.9 billion (66.5% of United Kingdom’s deficit vs. Norway)
- Petroleum gases: -$7 billion (27.5%)
- Zinc (unwrought): -$197.9 million (0.8%)
- Hydrocarbon derivatives: -$157.8 million (0.6%)
- Newsprint (rolls or sheets): -$153.5 million (0.6%)
- Processed petroleum oils: -$128.4 million (0.5%)
- Fertilizer mixes: -$98.7 million (0.4%)
- Aluminum plates, sheets, strips: -$71.4 million (0.3%)
- Iron ferroalloys: -$71.1 million (0.3%)
- Whole fish (frozen): -$59.8 million (0.2%)
Among these, petroleum gases had the fastest-growing UK deficit with Norway swelling by 47.8% from 2010 to 2014. In second place was unwrought zinc up 41.3% followed by whole frozen fish increasing by 29%.
Research Sources:
The World Factbook, Country Profiles, Central Intelligence Agency. Accessed on December 16, 2015
Trade Map, International Trade Centre. Accessed on December 16, 2015
Investopedia, Net Exports Definition. Accessed on December 16, 2015