UK FOREIGN TRADE
The UK Economy ranks sixth in the world in terms of export of commodities and services. The UK Economy does not lag far behind the US in terms of foreign investments. The expanding European Union as well as the large untapped markets in the developing countries are opening new avenues to earn huge financial gains and the overseas investment companies of UK are making rapid in roads into them.
A considerable amount of the food supplies necessary to meet the demands have to be imported from abroad. The UK Economy ranks fourth in the world in terms of volume of imports.
The main trading partners of UK in 2003 were European Union (more than 50%), US, Asia, Middle East, Australia Latin America and Africa.
Making improvements in the quality of life of its people, could also be one of the future challenges for the nation, as other European countries like Norway, Sweden and Switzerland are ranked above UK in terms of HDI.
However, imports have exceeded exports and the current account deficit, as on September 2004, was estimated to be US $ 15.8 billion.
Balance of Payments
The trade deficit of the UK Economy in goods and services has reduced by a smaller margin as of the third quarter of 2006, a further reduction from the earlier decreased mark (as recorded at the end of the second quarter) showing a gradual decrease. As of recent, the deficit is somewhat flat.
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CHALLENGES FACING UK
Government consumption has been restricted in recent years by strict controls on public spending, but is set to rise again over the next few years as the government strives to improve deficient public services. Given the deterioration in public finances owing to disappointing tax receipts, the government's main priority is to bring changes in its fiscal rules while making good its promises on public services such as health, education and transport.
The government's longer-term priority is to implement reforms to raise the country's productivity performance (which remains below the OECD average).
Also, the UK's relations with the EU could be headed for a crisis if, as seems likely, it fails to ratify the EU constitution in a referendum in 2006. So far, there is little or no prospect of the UK holding a referendum to join economic and monetary union over the next five years The share of GDP accounted for by gross fixed investment, typically fluctuates in a range of 16-17% of GDP.
The very low level of public investment depresses the rate of overall fixed capital formation in the UK. Thus, this is one area, which needs to be corrected.
Making improvements in the quality of life of its people, could also be one of the future challenges for the nation, as other European countries like Norway, Sweden and Switzerland are ranked above UK in terms of HDI.
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