The History of England

from Celts through 20th century


Category: Economy

For hundreds of years, and especially since the mid-nineteenth century, when the rapid growth of industry, commerce and shipping was accompanied by Britain’s development as an international trading centre, overseas trade has been of vital importance to the economy.

An analysis of the British economy has shown that the British workpeople are mainly engaged in manufacture. This is reflected in the character of Britain’s trade with foreign countries, which can be described in simple terms as the sale of goods that are manufactured in Britain (exports) so that the food and raw materials which cannot be produced in the country can be purchased abroad (imports).

In the past, overseas trade was thus very largely a straightforward exchange of manufactured goods for foodstuffs and raw materials. Much of the trade was with the dominions and colonies of the British empire.

But the nature of Britain’s overseas trade has changed. In exports, manufactured goods, including machinery and transport equipment, represent almost threequarters of the total (by value), while chemicals and petroleum products are also important. In imports, manufactured goods represent more than one-half (by value), while foods and crude oil (petroleum) are also important.

Britain is a major supplier of machinery, vehicles, aerospace products, metal manufactures, electrical equipment, chemicals and textiles, and a growing oil exporter.

An interesting fact is that the same groups of manufactured goods now head the list of imports. This is not so surprising. Such developments are a result of increased capitalist competition. The increase in the import of manufactured goods from the European Economic Community, Japan and the United States became so strong that in 1983 for the first time Britain began to import more manufactured goods than she exported. One of the consequences of this trend has been that Britain has found it difficult to export enough manufactures to pay for the imports. This.has produced a steady deficit which has been offset only by the money earned from the sale of North Sea oil. Britain’s balance of trade (the difference in value between exports and imports) was helped substantially by the exploitation of oil and natural gas in the North Sea, which enabled the country to reduce imports of petroleum. Furthermore, Britain was actually able to export some of the oil produced from the North Sea fields. However, the main gains derived from the sale of oil were enjoyed by the oil companies who control the trade.

An important part of overseas trade consists of what are called ‘invisible exports’. These are not actual goods (and so are ‘invisible’), but they represent services paid for by foreigners. Invisible trade accounts for one-third of British overseas earnings. Tourism, organized by what is usually called the tourist industry, is an important part of this group: it involves accommodating, catering and providing transport for the millions of foreigners who spend money on holidays in Britain.

Another part is represented by services of the large insurance companies, chiefly based in the City of London. Other invisible exports include the services to foreigners of British bankers, engineers, scientists and technical experts of many kinds. As for the banking services and investment dividends they are solely enjoyed by the top financial oligarchy.

Foods (in value) represent about 10 per cent of the total import bill. In the nation’s substantial food bill, the leading import items are fruit, vegetables, meat, beverages (tea, coffee, cocoa) and cereals (chiefly wheat for bread).

When the British empire collapsed, the economic ties between Britain and the Commonwealth countries were maintained for a time. However, with the growth of economic independence of the former colonies their trading associations with Britain have slackened (British exports to Commonwealth countries have declined to 12 per cent of her total exports).

After Britain joined the EEC or Common Market in 1973 her trade with the latter expanded substantially: today the EEC represents 49 per cent of British exports and 53 per cent of her imports. In general about three-quarters of Britain’s exports and imports are with other developed capitalist countries. The Federal Republic of Germany, the United States, Japan, France, the Irish Republic and other developed countries are leading trading partners of Britain.

As for the USSR and other socialist countries they represent only 2 per cent in British exports, and over 2 per cent in imports. Once a leading trading partner of the Soviet Union among capitalist countries, Britain has lost this priority. There are great opportunities to expand the volume of trade between the two countries. Recent positive developments in signing wide-scale trade agreements between Britain and the Soviet Union vividly demonstrate the necessity of a new approach. The Soviet Union has always proved to be a reliable partner. Wide-scale contacts would mean better employment opportunities for the unemployed in the country, would be beneficial for both countries and would contribute to world peace and cooperation.

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