Import and Export Markets in the United Kingdom Essay

Import and Export Markets in the United Kingdom - Essay Example The UK exports most of its goods to Brazil, India, Russia, and China while most of the imports come from china. The use of higher technology manufactured goods has caused a dramatic increase in both exports and imports. However, the recent financial crisis experienced around the world has led to a decline in imports and exports (Reuvid and Sherlock, 2011). In 2009, UK imports and exports totaled to $1,256 billion, which was equivalent to 4.3 of the world trade. The financial crisis has caused a rise in exchange rates of sterling pound, which has caused an 8.6% decrease in exports and 9.1% decrease in imports (Great Britain, 2009). Over the past ten years, the UK has been a net oil exporter, but production has been decreasing consistently over the past years. The oil industry has recorded an average decrease of 5.3% per year in exports. This has converted the UK from an oil export to an oil import land. Oil production in the region is less than demand, which calls for supplements thro ugh increased imports. Imports of other energy sources such as coal, electricity, and gas have increased over the past five years. In 2010, the importation of liquefied natural gas increased to account for 35% of total gas imports, while gas exports have decreased slightly over the same period. Gas has also been increasingly used for electricity supply with the amount required increasing by 47% (Great Britain, 2010). Changes in the financial sector affect business sentiments and investment decisions, which are linked to global trade. Data service exports at the start of 2007 were about 30 billion pounds while imports were about 33 billion pounds. Mid 2008 recorded the peak imports and exports at 40 billion and 34 billion pounds respectively. The rate of imports and exports of data services decreased consistently since 2008 reaching a low of 32 billion in imports and 29 billion in exports in mid 2009. However, an increase was recorded towards the end of 2010 with imports and exports reaching 41 and 35 billion respectively. The deep drop can be attributed to financial crisis experienced during this period. The dramatic drop experienced in 2009 can be attributed to the collapse of Lehman Brothers Company. Global insurance company AIG received below average ratings and mortgage lender Bradford & Bingley was nationalized. These changes caused the drop experienced in 2009. The UK has recorded an increase in intermediate goods trade, with a 40% increase in 2008 for non-fuel products. Production processes are divided between different countries, which have increased the flow of unfinished goods into and out of the UK. Most manufacturing countries have production firms in countries with low labor costs. Products manufactured in these countries are imported as finished or semi-finished goods. The sterling pound experienced strong depreciation between 2007 and 2008. Reports by the Bank of England (2010) suggest that goods and services exports responded differently to the weakening of sterling. Export of goods has been supported by the weakening because export performance is influenced by price. The service industry reported a decrease in exports due to a reduction in global demand. The fall of financial companies reduced the rate of financial service exports, which caused the reduced export services. According to the World Bank (BCC, 2011), trade in professional and technical services has been more resilient than trade in goods during the financial crisis. Most