EU leaders have confirmed that no trade deal will be discussed with the UK, until an agreement on other critical issues has been reached. One of these issues is the so called “divorce bill”, which according to some experts might reach up €100bn. Despite that, this sum hasn’t been officially confirmed, although it has already become an object of confrontations and rumours that could provoke the UK government to withdraw from the negotiations without succeeding to sign a trade deal.
But is that “the end of the world”?
The bad news
According to World’s Top Exports, 71.7% of UK exports were delivered to 15 countries in 2016. Eight of these countries are EU members, with Germany, France and the Netherlands being the UK’s highest importers. The total percentage of the UK exports towards EU countries is 40.6%. On the flip side, the EU countries who are among the biggest importers, are responsible for the £83.6bn of the total UK deficit in value of goods at £174.6bn. Germany is the top country that has exported more products in the UK, than it has imported into its own economy. Additionally, the trade deficit with other EU members like Spain, the Netherlands and Belgium, has been rapidly increasing in the last 7 years. The highest increase is with Spain -1,693%.
All these numbers clearly indicate that breaking trade connections with the EU, will not be beneficial for the UK. Still, they also represent opportunities for the development of specific individual relations and strategies to strengthen the country’s overall position on international trade.
The good news
The EU’s biggest economies may have imported almost half of the British exported products, but the UK’s best trading partner is the US with 14.8% of total exports. More so, Donald Trump has expressed his intentions several times of strengthening the country’s relations with Great Britain, promising a new bilateral trade deal. Theresa May was the first foreign leader to meet the US president after his inauguration, and they agreed on establishing UK-US working groups to research what could be achieved before Brexit.
Additionally, other non-EU countries like the UAE, Hong Kong and China are also increasing their trade relations with the UK. China has boosted the purchase of British products by 123% in 2016 alone. Furthermore, the United Arab Emirates have imported more British products than it had exported – marking £5.6bn surplus for the United Kingdom. Among the other trade partners with a positive balance for the UK are Hong Kong, Singapore and Saudi Arabia – with a total of £7bn surplus.
Positive news also came from South Korea, the eleventh biggest economy in the world, the country agreed to sign a new bilateral trade deal with the UK in December 2016. Currently, the United Kingdom is the second biggest business partner of the Asian countries, with a combined trade and investment worth £10.9bn.
Australia, China, India, New Zealand, Norway and the six members of the Gulf Cooperation Council, have also agreed to signed individual trade agreements with Britain, once it leaves the EU.