UK Trade Gap Worsens To 3.6 Billion As Plan A Falters Again

mystic_trev

Generali wrote: »

What's worrying about it?

I expect it worries him because it's a Conservative deficit, not a Labour one!

DecentLivingWage

The drop in exports - obvs! Britain is desperate for them, with home demand shrivelling and Osborne's plan flailing about but not achieving anything.

Generali

DecentLivingWage wrote: »

The drop in exports - obvs! Britain is desperate for them, with home demand shrivelling and Osborne's plan flailing about but not achieving anything.

What do you expect the Government to do about falling exports? They can't make the Irish (5th largest export market), Italian (7th largest) or Spanish (8th) economies better. I don't see how it matters whether the Government is Tory or Labour here. Other countries can only buy what they can afford and if their economies are FUBAR'd then then can't buy as much.

Why do you think this is a party political issue old chap? I think it's more about the UK's trade partners being in a mess. The UK can continue to import because she can afford to pay for her imports. That's not a bad thing.

DecentLivingWage

it is the suspicion of many that the pound has been allowed to drop, indeed has had to, due to lack of confidence in Osbornes fiscal competence, its rallying a little now (japanese ructions overnight US) but if the drop continues again afterwards petrol/haulage rices will rocket as we pay for this in dollars. Lets see what happens in Japan US after last night first.

They could start by dumping him and putting in someone more able!

Generali

DecentLivingWage wrote: »

it is the suspicion of many that the pound has been allowed to drop, indeed has had to, due to lack of confidence in Osbornes fiscal competence, its rallying a little now (japanese ructions overnight US) but if the drop continues again afterwards petrol/haulage rices will rocket as we pay for this in dollars. Lets see what happens in Japan US after last night first.

They could start by dumping him and putting in someone more able!

If the Pound falls then it makes exports more competitive, that's just maths. If the UK imports some stuff, adds some value and then exports it then the lower the pound is, the cheaper that value added appears to buyers. Your argument only works if UK businesses sell product for less than the sum of the cost of imported inputs. Clearly, that would be a dumb way to run a business.

As to Osbourne's competence, I agree that at best the jury is still out.

DecentLivingWage

Yes, you are right but point is - it didnt work! Trade gap worsening all the time... what's left to try? (And now dollar/yen have put paid to that little plan anyway as that should make Uk uncompetitve again for a while,,,) Meanwhile Ukip marches quietly to victory behind the scenes for councils - I think he'll be gone soon anyway!!!

Generali

DecentLivingWage wrote: »

Yes, you are right but point is - it didnt work! Trade gap worsening all the time... what's left to try? (And now dollar/yen have put paid to that little plan anyway as that should make Uk uncompetitve again for a while,,,) Meanwhile Ukip marches quietly to victory behind the scenes for councils - I think he'll be gone soon anyway!!!

I know I'm right, I used to teach economics at university.

What didn't work? AFAIK, the British Government doesn't have a mandate to resolve the economic problems of other countries.

So how should the trade gap get 'better'?

michaels

DLW are you suggesting that if the exchange rate was maintained at a higher level that the trade deficit would be smaller?

You also mention the govt relying on exports as domestic demand is shrivelling as part of the same argument that the trade deficit is too large - the large deficit is partially caused by an increase in imports which reflects robust domestic demand. Nothing wrong with debate but try and make your input at least internally consistent.

Thrugelmir

Generali wrote: »

As to Osbourne's competence, I agree that at best the jury is still out.

Given that this is a global event. No one person has the ability to control the situation. All Osborne and the Treasury can hope to do. Is gradually tighten down fiscally and hope to stay in front of the incoming tide. Europe is only being held together through political will. In financial terms it's up the creek without a paddle.

purch

As I have said ad nauseum, everything relating to FX is relative.

You can only influence matters within your own control, and for the UK Government there are very few matters it can control.

The Balance of Payments is a reflection of millions of different things, over which the Government an exert little or no control.

The leadership in China like to think they can and do control every aspect of their economy both internally and externally, and even they are struggling to achieve the outcomes they want.