Question 2
[25 marks]
The following table shows data on the UK’s trade balance in the first half of 2019 and the first
half of 2020. The United States (US), China, Germany, the Netherlands, and France are the
UK’s top five trading partners. A Comprehensive Economic Partnership Agreement has been
made with Japan, and Free Trade Agreement negotiations are currently underway with the
US, New Zealand and Australia. Trade agreement negotiations are also still ongoing between
the UK and the EU.
Table 1 – UK trade balance (E million)
First half of 2019
First half of 2020
Trade Partner
Goods
Services
Total trade
Goods
Services
Total trade
balance
balance
balance
balance
balance
balance
United States
7114.2
19186.0
26300.2
3738.3
19505.0
23243.3
China
-13607.8
1399.0
-12208.8
-13670.9
1843.0
-11827.9
Germany
-15253.4
978.0
-14275.4
9208. 1
3560.0
-5648.1
Netherlands
-9013.5
4208.0
4805.5
-7040.0
5150.0
-1890.0
France
-3352.3
3634.0
281.8
-1631.6
1503.0
-128.6
Japan
-1184.8
1197.0
12.2
-770.5
927.0
156.6
Australia
1230.9
2406.0
3636.9
1122.8
1975.0
3097.8
New Zealand
-11.5
207.0
195.5
-76.1
229.0
152.9
Note: Positive numbers (+) represent UK’s trade surplus; negative numbers (-) represent trade deficits.
Source: Office for National Statistics – UK trade statistics
2.1 Using relevant theory and your own knowledge, explain the UK’s trade patterns observed
in the table above.
(12 marks)
2.2 Since the start of the COVID-19 pandemic, the UK has suspended import tariffs on
medical supplies (including face masks, gloves and other protective equipment). Discuss
the economic consequences of this trade policy (i.e., suspending tariffs) on the UK
economy.
(13 marks) This is a complete question
