Importance of Balance of Trade in UK Economy during COVID-19

This research report evaluates the importance of balance of trade in UK economy during the time of COVID-19. It includes literature review, research methodology, data analysis strategy, and conclusion.

Research methods
dissertation proposal
(Importance of balance of trade in UK economy
during the time of COVID-19)
Student’s name:
BUCKS ID:

Table of Contents
Introduction:..........................................................................................................................................3
Rationale............................................................................................................................................3
Aim....................................................................................................................................................3
Objectives .........................................................................................................................................3
Literature Review:.................................................................................................................................3
Research Methodology..........................................................................................................................5
Approach ..........................................................................................................................................5
Design................................................................................................................................................6
Participants........................................................................................................................................6
Data Analysis Strategy.......................................................................................................................6
Validity and reliability........................................................................................................................6
Conclusion:............................................................................................................................................6
References ............................................................................................................................................8
3

Introduction:
Balance of Trade is defined as the difference among the value of exports of a country
and the imports for as given duration of time period. It has been consider as the largest
element of the balance of payment of the country. During COVID-19, all the business
transactions has been stopped because of the guidelines issued by the government of country.
The stoppage in the business practices highly effect the value of import and export of the
economy of United Kingdom (Ahmad and et. al., 2022). In simple words, it can be said that
the COVID-19 result in the decrease in the balance of trade along with the huge losses in the
economy of United Kingdom.
Rationale
It has been analysed that the COVID-19 highly affect the entire economy of United
Kingdom. The topic chosen for this research report is the importance of balance of trade in
UK economy during the COVID-19 pandemic. It helps the researcher in gaining the
important data and information related to the importance of balance of trade in the United
Kingdom during COVID-19. The main reason behind the selection of this topic is the widr
scope of the respective topic as the researcher can gain the maximum amount of information
and data related to the respective topic.
Aim
“To evaluate the importance of balance of trade in UK economy during the time of COVID-
19.”
Objectives
The main objectives of this Research are as follows:
1. To determine the concept of balance of trade in the Economy of UK.
2. To examine the impact of COVID-19 on the economies in balance of trade.
3. To analyse the importance of economies of balance of trade in the UK economy.
Literature Review:
To determine the concept of balance of trade in the Economy of UK.
According to ECB Economic Bulletin, (2021) Trends in UK import demand and
balance of payments since the referendum assessing the potential impact on external demand
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in the euro area. Focuses on early insights into the factors that influenced UK imports during
the period from the referendum to the onset of the coronavirus (Covid19) pandemic. UK
withdrawal from the EU in the coming years of the Eurozone It can cause some disruption to
export growth, for example, if UK import demand is reduced or diverted as a result of Brexit.
Further pandemic-related turmoil in the second half of December could weaken final
inventory building efforts in the second half of 2020, but January's rebalancing was
particularly strong, with lower eurozone commodity imports that month. It led to. With the
previous Brexit deadline (Balance of Trade, 2022). The pandemic continued to cause turmoil
at this point, but the first data on eurozone exports in the first quarter of 2021 showed that
there was a clear turmoil in the UK's eurozone trading patterns earlier this year. is showing.
Exports of eurozone commodities to the UK fell by almost one-third month-on-month in
January, but imports fell by more than half. In contrast, commodity exports in the euro area
have increased sharply. This is most likely the direct result of a trade diversion, especially to
Ireland.
To examine the impact of COVID-19 on the economies in balance of trade.
As per the Sumit Dey-Chowdhury (2020) The pandemic will cause the UK and the
world economy to shrink this year more than it would follow the 2008 global financial crisis.
Given the open nature of the UK economy, including its role as a global financial center, the
COVID 19 pandemic has an impact on UK payment balances. In line with the UK national
accounts, this provides a coherent framework for understanding this impact on UK
international transactions with other parts of the world. The purpose is to clarify international
transactions that may be affected by the COVID 19 pandemic and how this will affect the
UK's net lending or borrowing position. This article describes how COVID 19 affects the
preparation of the UK's National Accounts, including estimates of Gross Domestic Product
(GDP) and the UK's National Accounts (Coronavirus and the effects on the UK Balance of
Payments, 2021). We have also published material on how COVID19 affects inflation, the
labor market and productivity estimates. In summary, they provide a complete picture of the
potential impact of COVID 19 on the UK economy and the practical impact of measuring it.
To analyse the importance of economies of balance of trade in the UK economy.
Accoding to Adithyan (2022) The difference between the value of exports and the
value of imports in a country over a period of time is called the trade balance or BOT, and is
also called the trade balance. The trade balance is an important part of a country's balance of
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payments and an important indicator of a country's trade. A positive trade balance indicates a
country's trade surplus, and a negative trade balance indicates a trade deficit. This simply
means that if a country imports more commodities than it exports, it will have a trade deficit.
On the other hand, if a country exports more goods than it imports, it creates a trade surplus.
The trade balance shows the UK's trade surplus and trade deficit, neither of which is a useful
indicator of UK economic health (Importance of BOT, 2022). Many people misunderstand
that a trade surplus means a good economy and a trade deficit means a weak economy, but
that is not the case. Many countries, such as the United Kingdom, continue to run a trade
deficit due to their high export volumes. That does not mean that the economy is weak. The
impact of the trade balance on the economy depends not on the trade surplus or deficit, but
on many other factors in the country, such as trade policy, the size of the trade imbalance,
and the positive or negative period of the trade balance. A trade balance or BOT can only
show a country's trade balance, but it is not enough to show the strengths or weaknesses of
the UK economy.
Research Methodology
Research methodology is defined as one of the essential chapters in the entire
dissertation. The research use this section for the purpose of gaining the answer of two
essential question i.e. how data will be collected and second one is how it will be analysed. In
simple words, it can be defined as the manner of defining the intends of researcher for
carrying out their research. The research methodology is essential as it inculcates the
scientific and inductive thinking which leads to the development of logical habits. It also help
in finding the best possible solution to the operational problems and issues.
Approach
The chosen approach for this research is qualitative approach as it is defined as the method of
market research which majorly focus on collecting the data from open ended and
conversational communication (Dhar, 2020). This approach is important in research as it is
the most powerful tool through which the researcher want to know about the customers and
market. It also aids the researcher in gaining the reliable and insight data which leads to the
proper understanding of current trends and patterns as well.
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Design
It is defined as the framework of market research methods and techniques which are being
selected by the investigators. The selected design for the current research is qualitative in
which the survey is the research method.
Participants
the general public or people living in the United Kingdom are consider as the participants of
this research. The researcher is using the technique of sampling in order to gather the data
and information. Probability and non probability are the two essential sampling techniques of
sampling the participants. In the presented research, the investigator has chosen the
probability sampling and random sampling method to select the participants.
Data Analysis Strategy
It is defined as the plan and action which provide the directions along with guidelines
which help the researcher in getting the thoughts and ideas related to the gathering of data
and information (Hatem, Baydaa and Zeina, 2020). There are several types of research
strategies such as survey, systematic literature review, case study, action research and many
more. In the respective research, the researcher has used the survey research strategy in order
to collect the information and data.
Validity and reliability
The above presented research is important because of its reliability and validity. The
respective research can be consider as valid because all the essential information is being
collected through the use of questionnaire. The researcher has designed the questionnaire in
order to collect the information from participants. The researcher also make the effective
reliability through getting the information related to the investigation. The researcher has
already taken the informed consent through their participants before collecting information
from them (Song and Zhou, 2020). Hence, it can be said that the above mentioned research is
valid and reliable because of its greater senses.
Conclusion:
From the above research report, it has been concluded that the COVID-19 highly
effect the economy of United Kingdom which also include the Balance of Trade. Decrease in
the difference among the values of import and export of United Kingdom result in the falling
down of economy. Balance of Trade is highly important in the economy of United Kingdom.
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Hence, it is essential for the government to maintain the balance in order to make the
economy of country in a well effective manner.
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References
Books and Journal
Ahmad and et. al., 2022. Assessing long-and short-run dynamic interplay among balance of
trade, aggregate economic output, real exchange rate, and CO2 emissions in
Pakistan. Environment, Development and Sustainability, 24(5), pp.7283-7323.
Dhar, B.K., 2020. Impact of COVID-19 on UK Economy. Economic Affairs, 9(3/4), pp.23-
26.
Hatem, K.B., Baydaa, J.K. and Zeina, K.M., 2020. Measuring the relationship between the
exchange rate and the Iraqi trade balance for the period 2003-2018 using the cause
of Granger. Экономические отношения, 10(4), pp.1113-1130.
Song, L. and Zhou, Y., 2020. The COVID‐19 pandemic and its impact on the global
economy: what does it take to turn crisis into opportunity?. China & World
Economy, 28(4), pp.1-25.
Online
Balance of Trade, 2022 [Online] Available Through
<https://www.ecb.europa.eu/pub/economic-bulletin/articles/2021/html/
ecb.ebart202103_01~27a04ff335.en.html>
Coronavirus and the effects on the UK Balance of Payments, 2021 [Online] Available
Through <https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/
articles/coronavirusandtheeffectsontheukbalanceofpayments/2020-06-22>
Importance of BOT, 2022 [Online] Available Through <https://cleartax.in/g/terms/balance-
of-trade#:~:text=Balance%20of%20trade%20is%20an,of%20trade%20indicates
%20trade%20deficit>
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