Register to read the introduction…
The balance on trade figures shows that from 1973-74 UK had difficulties in restricting imports; the deficit on net exports increased by vast fromUS$ -3958367690 to US$ -9161318512(see table 2).
However since 1975 U.K has attempted to decrease these deficits from about US$-3437500272 to a surplus net exports US$ 13346502440 until 1980(see table 2).Interestingly, UK managed to accomplish this positive outcome by evaluating industry performance in home and overseas markets (Hitiris&Bedrossian,1987).
2.1.2 International events and domestic policies adapted during 1970-1980 Following, almost a decade of trade deficits, unemployment concerns and major economic downturns in 1960-69, Edward Heath won the general elections of 1970 and served as the prime minister of Britain during 1970-74. Heaths government included major reforms in the local government. In 1973 Heath led the UK in to European Economic Community (EEC)(Google,2012,1).During Heath's premiership unemployment rates amplified, however(See appendix 1.0).Yet these aren’t reasons that properly justify the deficits throughout 1973-76. So, exactly what happened throughout 1973-76 raises curiosity? The apparent unprecedented size of these deficits are however very illusory. Baimbridge & Whyman (2008) asserts that since UK joined EEC it had to reduce 20% of tariffs (especially in manufacturing industries) among member nations during the years 1973-77 and hence it became easier to import for countries such as Denmark and Ireland. This can explain the sudden increase in imports in 1973 in contrast to other years. It can also be argued that since UK joined the EEC, international trade expanded with member nations which also increased exports in 1973(see table 1 & 2). “ Additionally the Secondary banking crisis could also elucidate these deficits.The main cause, however, is the recessionoriginated from USA.Further insights also reveals that the oil crisis (see appendix 2.0) was the main explanation attributing to the recession. The oil crisis caused severe inflation particularly in the UK; which made the exports uncompetitive. ” Source: Kavanagh, 2012, para.16 Thus, in 1976 due to continuing deficits since 1972 and for crisis recovery, it was forced to obtain a £2.3 billion bailout from International Monetary Fund (IMF) (Winnett, 2010).The IMF agreement began to improve the overall economic and financial status. At end of 1977 the balance of trade started to improve (proven in table 1 & 2) and was partly due to new oil revenues. As such UK didn’t have to withdraw the full loan from IMF but however the IMF crisis armour-plated a change in domestic policy orientation towards the control of inflation and expenditure and away from full employment and social welfare. Note: Recession is a period of economic downturns (or two consecutive quarters of falling GDP) which illustrates declining real incomes and rising unemployment. When recession incurs the trade balance is affected .Since falling GDP implies lower output and reduction in the quantity to export. Moreover rising unemployment reduces demand for imports or luxury goods as incomes are falling. 2.1.3 Interesting facts throughout 1970-80 * Some economists also believed that the mid 1970s deficits were caused by a sudden rise in the price of energy (energy crisis 1973-74 caused due to the oil crisis), of which UK was a net importer. * As mentioned above, although in 1977 U.K did …show more content…
China still an emerging nation (according to IMF) spends more than what UK spends on imports and exports even more than UK.
This report specifically focused on UKs trade patterns and how it was affected by some events, policies and so on. From the research conducted throughout this report U.Ks amalgamation with EU appears to be unjustified since UK has been recording repetitive deficits on its external balance on trade since 1998.What more towards this is that ever since UK joined EU it has recorded mostly trade deficits rather than surpluses. The main motive behind U.K’s amalgamation with EU is seemingly very meaningless.
Also note that the number of regional trade arrangements have grown so much thought out the globe that it can be said that UK could have lost some of its potential low-cost importers. Hence there are so much of deficits on net exports. For instance long ago UK was Canada’s largest trading partner but now both are in separate trading blocs, the former in EU and the latter in
However since 1975 U.K has attempted to decrease these deficits from about US$-3437500272 to a surplus net exports US$ 13346502440 until 1980(see table 2).Interestingly, UK managed to accomplish this positive outcome by evaluating industry performance in home and overseas markets (Hitiris&Bedrossian,1987).
2.1.2 International events and domestic policies adapted during 1970-1980 Following, almost a decade of trade deficits, unemployment concerns and major economic downturns in 1960-69, Edward Heath won the general elections of 1970 and served as the prime minister of Britain during 1970-74. Heaths government included major reforms in the local government. In 1973 Heath led the UK in to European Economic Community (EEC)(Google,2012,1).During Heath's premiership unemployment rates amplified, however(See appendix 1.0).Yet these aren’t reasons that properly justify the deficits throughout 1973-76. So, exactly what happened throughout 1973-76 raises curiosity? The apparent unprecedented size of these deficits are however very illusory. Baimbridge & Whyman (2008) asserts that since UK joined EEC it had to reduce 20% of tariffs (especially in manufacturing industries) among member nations during the years 1973-77 and hence it became easier to import for countries such as Denmark and Ireland. This can explain the sudden increase in imports in 1973 in contrast to other years. It can also be argued that since UK joined the EEC, international trade expanded with member nations which also increased exports in 1973(see table 1 & 2). “ Additionally the Secondary banking crisis could also elucidate these deficits.The main cause, however, is the recessionoriginated from USA.Further insights also reveals that the oil crisis (see appendix 2.0) was the main explanation attributing to the recession. The oil crisis caused severe inflation particularly in the UK; which made the exports uncompetitive. ” Source: Kavanagh, 2012, para.16 Thus, in 1976 due to continuing deficits since 1972 and for crisis recovery, it was forced to obtain a £2.3 billion bailout from International Monetary Fund (IMF) (Winnett, 2010).The IMF agreement began to improve the overall economic and financial status. At end of 1977 the balance of trade started to improve (proven in table 1 & 2) and was partly due to new oil revenues. As such UK didn’t have to withdraw the full loan from IMF but however the IMF crisis armour-plated a change in domestic policy orientation towards the control of inflation and expenditure and away from full employment and social welfare. Note: Recession is a period of economic downturns (or two consecutive quarters of falling GDP) which illustrates declining real incomes and rising unemployment. When recession incurs the trade balance is affected .Since falling GDP implies lower output and reduction in the quantity to export. Moreover rising unemployment reduces demand for imports or luxury goods as incomes are falling. 2.1.3 Interesting facts throughout 1970-80 * Some economists also believed that the mid 1970s deficits were caused by a sudden rise in the price of energy (energy crisis 1973-74 caused due to the oil crisis), of which UK was a net importer. * As mentioned above, although in 1977 U.K did …show more content…
China still an emerging nation (according to IMF) spends more than what UK spends on imports and exports even more than UK.
This report specifically focused on UKs trade patterns and how it was affected by some events, policies and so on. From the research conducted throughout this report U.Ks amalgamation with EU appears to be unjustified since UK has been recording repetitive deficits on its external balance on trade since 1998.What more towards this is that ever since UK joined EU it has recorded mostly trade deficits rather than surpluses. The main motive behind U.K’s amalgamation with EU is seemingly very meaningless.
Also note that the number of regional trade arrangements have grown so much thought out the globe that it can be said that UK could have lost some of its potential low-cost importers. Hence there are so much of deficits on net exports. For instance long ago UK was Canada’s largest trading partner but now both are in separate trading blocs, the former in EU and the latter in