3 – A Real Taste for the World's Trade

Definition of foreign trade

The activity of buying or selling goods and services between countries, comprising exports and imports.

First core question of foreign trade

What are the main goods and services that the UK exports and imports?

Second core question of foreign trade

Who are the UK's main trading partners and with which countries does the UK do business?

Third core question of foreign trade

What are the current trends in the UK's foreign trade and how did Brexit impact it?

Total foreign trade volume of the UK in 2024 according to the WTO

Approximately $2,373 billion.

Total value of UK trade in goods in 2024

$1,329 billion total ($513 billion exports + $816 billion imports).

Total value of UK trade in services in 2024

$1,044 billion total ($645 billion exports + $399 billion imports).

Global ranking of the UK for goods

14th largest exporter of goods in the world, and 4th largest importer.

Global ranking of the UK for services

2nd largest exporter of services in the world, and 5th largest importer.

Comparison between France and the UK in goods and services

France outperforms the UK in goods exports while importing fewer goods, but the UK is significantly more dynamic in services exports.

Definition of international competitiveness

A country's ability to produce attractive products and services and sell them at the right prices.

Global market share of the UK in international trade

Holding a 4% to 5% market share in global trade.

Trade dependency rate of the UK in 2024

Foreign trade represented 63% of the UK's GDP.

Trade balance trend of the UK since 2010

The UK has run a persistent trade deficit due to stagnating goods exports.

UK trade volume growth rate between 2019 and 2024

An increase of just 1%, lagging behind the EU (+8%) and the G7 (+8%).

Top exported goods by the UK

Cars, mechanical power generators, medicinal and pharmaceutical products, crude oil, aircraft, beverages, tobacco, and electronic equipment.

Top imported goods by the UK

Cars, medicinal and pharmaceutical products, refined and crude oil, mechanical power generators, electronic equipment, machinery, vegetables, fruit, and clothing.

Reason for overlapping goods in UK trade

Brand preferences (e.g., foreign car brands) and oil refining specifics (crude oil exported to be refined abroad).

Main categories of exported and imported services

Other business services, financial services, travel services, and transport services.

Examples of other business services exported digitally

Research & Development (R&D), technical assistance, professional and management services, advertising, communication, and architectural services.

Examples of financial and travel services

Banking and insurance for financial services; tourism for travel services.

Definition of the first mode of service exportation

Cross-border trade: only the service crosses the border (e.g., UK consulting firm providing reports to an Australian client).

Definition of the second mode of service exportation

Consumption of services by foreigners in the UK (e.g., a Chinese tourist spending money on hotels and shopping in London).

Definition of the third mode of service exportation

Commercial presence abroad: a UK services company establishes a subsidiary or branch abroad (e.g., Marks & Spencer in Paris).

Definition of the fourth mode of service exportation

Presence of individuals abroad: an employee travels abroad to provide a service (e.g., a British architect advising clients in France).

Main export markets (clients) of the UK

The European Union, the US, China, Switzerland, India, Canada, Singapore, Hong Kong, Japan, Australia, the United Arab Emirates, and Saudi Arabia.

Most important clients within the EU for the UK

Germany, Ireland, the Netherlands, and France.

Main import suppliers of the UK

The EU, the US, China, Norway, India, Switzerland, Turkey, Japan, Canada, Hong Kong, and the United Arab Emirates.

Most important import suppliers within the EU

Germany, the Netherlands, France, and Spain.

Definition of the European Union (EU)

A political and economic union of 27 member states representing the world's largest trading bloc.

Origins and founding treaty of the EU

Established in 1993 by the Maastricht Treaty, succeeding the European Economic Community (EEC) born in 1957.

Founding members of the EEC in 1957

France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg.

Major early enlargements of the EEC

Joined by the UK, Ireland, and Denmark in 1973, followed by Spain, Portugal, and Greece in the 1980s.

Establishment and definition of the European Single Market

Created in 1993, it is a free trade area ensuring the free movement of four pillars.

The four pillars / freedoms of the European Single Market

Free movement of persons, goods, services, and capital/money.

Definition of a Free Trade Area

A zone where trade barriers between member states are reduced or eliminated.

First main form of trade barrier

Tariffs: taxes on imported goods protecting domestic industries by increasing foreign prices.

Second main form of trade barrier

Quotas: quantitative limits on exported or imported goods.

Third main form of trade barrier

Technical barriers: laws, regulations, standards, and testing/certification procedures.

First condition for Single Market access

Comply with the four freedoms (persons, goods, services, capital).

Second and third conditions for Single Market access

Contribute to the EU's budget and accept the jurisdiction of the European Court of Justice (ECJ).

Definition, location, and composition of the European Court of Justice

Judicial authority of the EU based in Luxembourg, composed of 27 judges overseeing the correct implementation of EU law.

Definition of a Customs Union

A free trade area applying a Common External Tariff (CET) on goods entering from third countries outside the EU.

Definition and composition of the Schengen Area

Comprises 26 countries where passport controls are abolished (22 EU members plus 4 non-EU countries).

Non-EU countries belonging to the Schengen Area

Norway, Iceland, Liechtenstein, and Switzerland.

Definition and composition of the Eurozone

Comprises 21 countries sharing the euro currenc