George Osborne's big idea was that we were going to trade our way out of recession.
Yesterday's trade figures show that the trade deficit for goods and services hit £4.8 bn in December and the deficit for goods alone was £9.2 bn; both were the worst figures ever. The annual trade deficit for 2010 was £46.2 bn, up from
£29.7 bn in 2009. In fairness, it should be noted that there was a £51 bn annual surplus on trade in services but that this was down £1.7 bn from 2009.
So much for trading our way out of this problem.
The reality is our manufacturing sector is too small to exploit our weak currency now. And that means this policy did not, does not and will not stack.
Or to put it another way, the need for a Plan B for the UK grows daily.
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You Brits are clever, you have talked your commercial counterparts abroad into giving you valuable stuff in exchange for your currency.
Now what can we foreigners do with this currency?
Oh, right we can buy British.
In the meantime, we have vapour ware and you have our stuff, which represents a lot of our capital and work. I repeat, very clever you Brits, well, except for some, who reverse the actual consequences of a trade ‘deficit’.
I look forward to my sarcastic comment being deleted.
It would be a big step forward if there was a better understanding of what ‘trade’ now actually means. UK/EU trade policy is primarily about service investment opportunities overseas for transnational financial service firms based in London. But there are next to no jobs for UK people in this, the action is overseas, and there is little in it for the UK govt either (apart from directorships down the track for the people involved) – the firms offshore any tax obligations.
The other hidden, but very signficant factor in ‘trade’ – and set to grow as secret commitments are made on our part in Brussels – is the moving of workers around, by transnational corporations, to capitalise on wage differentials between countries. Yes, this is now ‘trade’!
But you won’t find these realities in the Trade White Paper that came out this week – carefully hidden under Project Merlin, which distracted just about everyone. Smarty commentators may have seen through the empty promises of ‘Project Merlin’ – it wasn’t after all that hard – but as a distraction strategy it worked perfectly, taking attention from the Trade White Paper.