“The headline news from the Office for National Statistics is that the monthly trade deficit in February narrowed a bit, down to £2.1bn from the £2.2bn in January.”
This sort of article has been written about the UK economy for as long as I can remember, except the cliche of “rebalancing the economy” has only become fashionable in the last few years.
The simple fact is that the UK government can make a start towards “rebalancing” any time it likes by reducing the sale of Treasury securities on the international market. It can make the road as long or as short as it likes! I suspect that this government will be like all previous governments since the early 80’s and won’t take that turning at all. The road it is on currently is a lot smoother!
It is the sale of those securities, and those alone, which allows the UK to import more than it exports. If these are counted as exports then trade does balance. It has to.
Germany sells Audis and BMWs to the world. Britain sells Gilts. They are a lot easier to make and ship! (This is quite a glib statement BTW and not at all accurate! Britain’s current account deficit is about 4% and there’s nothing at all to worry about.)
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