How Britain’s stubborn trade deficit could be fixed
The trade deficit continues to be a bone of contention for the British economy. How can the UK reduce its trade deficit?
Taking a look back at the performance of the UK economy in 2014, we can see there’s always one aspect that could do with being fixed, the trade balance, or as it’s more commonly known in Britain, the trade deficit.
Net trade negatively impacted GDP growth by 0.5 percentage points, which is really cutting back the UK’s economic recovery.
UK 2014 GDP forecast at three per cent
Despite this, the UK remains set to be the fastest growing G7 economy in 2014, despite a slight slowdown in the third quarter, and the annual GDP growth rate is forecast at three per cent. However, the economy could have been up 3.5 per cent if the UK’s trade deficit weren’t so lacklustre.
Firms that export grow 20 per cent more than non-exporters
The government in the UK continues to try and find ways to boost exports and rebalance trade with the likes of initiatives such as Export Week. It’s been found that businesses who export grow around 20 per cent more, on average, than those who don’t. Despite this, most UK firms find it difficult to break from routine and search out international customers.
Businesses often restrict themselves to the domestic market, but the British Chambers of Commerce (BCC) is attempting to change the habitual patterns of UK firms. The BCC is working towards building an extensive international network of Chambers of Commerce and overseas business groups. This would help support those UK companies looking to export and will allow them to make the right connections before stepping off the plane.
Future of exports are young, high-growth companies
Young high-growth businesses would struggle to reach the right market overseas without organisations like the BCC and support from initiatives like Export Week. However, it simply isn’t enough and more needs to be done to advertise the range of support available, especially if the UK wishes to meet the 2020 targets laid out by the Prime Minister.