International Trade Finance: Examining the Financial Market and Capital Allocation in the UK

This report examines the financial market and capital allocation in the UK with a focus on international trade finance. It covers the UK's financial market, capital allocation within the domestic and international markets, and the economic aspect of the country. The report also discusses challenges faced by the nation due to trade and industrialisation policies.

International Trade
Finance and Investment

Page of Contents
1 EXECUTIVE SUMMARY.........................................................................................................................3
2 INTRODUCTION...................................................................................................................................5
3 MAIN BODY.........................................................................................................................................5
3.1 Detailed examination and evaluation of financial market with reference to the UK and
analysis of its background......................................................................................................................5
3.2 Examination of the allocation of the capital that is done within the domestic economy.........7
3.3 Examination and evaluation of the capital allocation that is done within the international
markets...................................................................................................................................................8
3.4 Detailed analysis and evaluation of the economic aspect of the country.................................9
3.5 Detailed explanation and evaluation of the challenges that are faced by the nation due to
the trade and industrialisation policies................................................................................................10
4 CONCLUSION.....................................................................................................................................11
5 RECOMMENDATIONS........................................................................................................................12
6 REFERENCES......................................................................................................................................13
7 APPENDIX..........................................................................................................................................15

1 EXECUTIVE SUMMARY
International commerce among nations is a key component in boosting life quality, creating jobs,
and allowing clients to purchase a wider array of items. This report deals with the financial
sector and its conditions, which are quite important. The economics of the United Kingdom is
discussed in depth in this study. These are discussed that how to UK handle their international
market in effective manner and handle in its own economy level. This research offers a detailed
description of the various financial industries that are now controlling the marketplace, and also
the data collection processes that are used to improve the company's status in a profitable way.
Aside from that, the study explores the many challenges that emerge as a consequence of
monetary strategy and modernization, along with their lengthy impact on the organization's
operations.

2 INTRODUCTION
International commerce is one of the most significant and critical features since it allow
various companies to business all over the world in order to expand and succeed in a dynamic
and challenging marketplace. Commerce finance refers to the financial assistance offered by
banks and other financial institutions in the sector of international trade using financial
instruments to manage such as bank guarantees, credit cards, and so on. These various financial
tools and solutions assist buyers and sellers in carrying out commercial operations with little
financial risk (Nguyen and Cieślik, 2021). It adds a third party to the mix, bridging among
imports and exports and covering operations such as case of credit issuing, financing, and
functionality. This research examines, analyses, and evaluates the International trade, finance
and investment in the United Kingdom, which has a great deal of value for businesses
functioning in today's environment. Aside from just that, this study covers a variety of topics
relating to the present financial market in the United Kingdom. Furthermore, the research
discusses capital management approaches that are currently in use in the marketplace and are
employed by various groups to improve sales and profits in the sector in which they operate. At
the end of the report define how to industrialize and trade policies impact on the economy.
3 MAIN BODY
3.1 Detailed examination and evaluation of financial market with reference
to the UK and analysis of its background
The financial market is crucial at this time because it has the capacity to boost and
strengthen the nation's productivity, and it can do so in a favorable way if handled correctly. The
following is a step-by-step description of what it means.
Financial markets- It is a site where day-to-day exchanges of investment products, such
as all kinds of relationships, convertible notes, equities, and etc, are conducted, and it is also
inside the available to the average individual, as no additional costs are imposed, making it one
of the marketplaces that stays in consumption year after year (Safi and et.al, 2021). Some of its
assets, which are traded on a regular, quarterly, or annual basis, might fetch a large sum of
money by yielding a high interest rate, attracting a large number of purchasers to this
marketplace. Because the return is bigger, the risk is also greater, and it is also claimed that the

greater the cost, the greater the rewards will be. There seem to be a variety of financial market
instruments that people use depending on their needs because each one has a distinct significance
and worth in today's world (Bhattarai, 2019).
As a consequence, it's essential to examine and assess the right one from the list previous
section so that it can lead to higher progress and expansion in a short amount of time (Cuong,
Luu and Tuan, 2021). Even though there are several tools used during money system, the most
important are the financial industry, which is one of the most widely utilized sectors in the old
and new, and also the mortgage, futures, and derivatives markets, all of which carry significant
value. One of the markets, the forex market, is very significant since it deals with international
currencies and currency, both of which are critical to the nation's survival. A financial market
encompasses a wide range of operations, from the purchase and sale of securities, shares,
currencies, and derivatives to share trading in the secondhand market (Ohrn, 2018).
The United Kingdom's financial market- The United Kingdom is a worldwide
powerhouse in relation to the number of financial markets it has. The UK accounts for around 18
quarter of worldwide cross-border bank credit, and the country's insurance business is among the
highest in Europe, if not the globe, and hence has a great deal of value in the present market.
This insurance cost accounts for 19.2% of all European rates and 5.8% of worldwide rates.
London, the headquartered in the United Kingdom, is recognized as a financial hub since the city
is home to over 250 international banks and their subsidiaries, as well as having a foreign
exchange turnover of over 37% when relative to the overall of the globe. Furthermore, the UK's
financial services industry provided £132 billion to the nation's gross domestic product, which is
a substantial sum because it accounted for 6.9% of overall economic activity, and London
supplied roughly 49% of it (Orji and et.al, 2021).
The UK financial market backs the administration by making significant contributions in a
short period of time, making it extremely important for the country's long-term progress and
expansion. There are a variety of businesses functioning in the financial market that assist the
development of countries and also helping to raise and improve the quality of life by allowing
citizens to interact in the marketplace in order to profit from the good yields that are currently
available. Besides that, it creates job opportunities to a large number of people, thereby
contributing to the reduction of unemployment in the country by allowing knowledgeable youths

to pursue careers in the financial marketplace, which offers a wide range of possibilities for
personally and professionally economic progress. Furthermore, both the direct and indirect
markets are well-positioned in relation to the United Kingdom, allowing it to gain market share
according to its needs and giving the country an advantage in influencing the marketplace(Fan
and et.al, 2021).
3.2 Examination of the allocation of the capital that is done within the
domestic economy
Economy may be described as a form or instead a structure whereby all actions associated
with the economic processes are carried out, demonstrating how individuals in a certain region
earn a livelihood and pay their daily expenses. Although business sectors or those who are
dependent on or connected to the use of precious resources for the fulfillment of human needs,
such as spending, wherein products and services are primarily exchanged for monetary value.
There are three sorts of economies: market-based or capitalistic markets, managed or socialism
markets, and differential advantage, and each country has its own manner of managing its
economy based on its needs and desires (Yao, Chen and Zhang, 2021).
Domestic economy- It may be described as the exchange of goods and services inside a
specific economy that is well within country's borders. The United Kingdom is in a strong
position in this respect, since it is functioning extraordinarily well on both the local and
international markets. The Real Gdp (GDP) of a nation is used to assess its industry, and the UK
has the sixth biggest economy in the world, valued at $2.83 trillion, trailing only the United
States, China, Japan, Germany, and India.It has a community of 66 million people, the bulk of
whom are young, and so contributing to the country's progress and expansion by engaging in
productive work that create growth. England, North Ireland, Wales, and Scotland are the four
constituent areas of the United Kingdom, and England is the one which produces the bulk of
GDP, earning it the nickname "the heart of the UK." Without it, the UK would struggle to keep
up with the competition.
It employs a market system where both government and companies own the administer all
of the national money, making it one of the most significant and critical aspects for the nation's
long-term development and prosperity. The European Union is the United Kingdom's single

biggest trade partner, accounting for 43.5 percent of all exporters in a given year. Although all
businesses pay into the system, the crude oil, gas, and aviation sectors account for a significant
portion of the financial system, leads to rapid development (Ambrocio and Jang, 2021).
Capital allocation in the United Kingdom, particularly within the internal economic system
Resource sharing is the practice of investing a nation's money in a manner that maximizes its
quality and productivity. Because of the size of the place and the importance of its activities,
public investment is one of the most important aspects, and everything of them are detailed and
sequentially discussed beneath.
Infrastructure facilities: Infrastructure projects have a lot of value since they may help a
future demand and thrive, and if they're not built properly, they can ruin a nation's building brand
worth in the lengthy period. It also has a significant role in raising living standards by providing
residents with numerous possibilities to advance in a fiercely competitive world. The United
Kingdom likes to listen to this and has preserved a platform that supports businesses to
participate to the nation’s GDP in a meaningful way by utilizing the facilities established by the
British government. As a result, it aids in linking the country to other regions of the world,
allowing for easy business with little hiccups (Qirjo and Pascalau, 2021).
Small businesses- Small businesses are critical for any country because they serve as a
means of narrowing the gap between wholesalers and customers by producing goods and
services to those in community that do not have easy access to the large businesses to satisfy
their goals and demands. The United Kingdom invested significantly in this area because it has
several advantages, including the provision of job possibilities, which aim to minimize
unemployment problem, resulting in an enhanced and expanded quality of living for its citizens
who live there.
3.3 Examination and evaluation of the capital allocation that is done within
the international markets
A capital market is essentially a mechanism in which individuals, organizations and
countries with surplus cash move those monies to those with a scarcity of money. This system
allows those who want to borrow or actually invest to do that in an effective manner. When
somebody borrows money to purchase a vehicle or a home, for instance, they are using the

financial system. The attractive financial task of channeling money to useful purposes is carried
out by stock markets (Raghutla and et.al, 2021).
International market- It is a marketplace wherein firms operate far outside their geographic
area in order to further develop and thrive in the marketplace by boosting the worth of the firm in
the market (Yan, Ferraro and Almandoz, 2019). The United Kingdom uses a variety of tactics for
transferring its money into other international currency and all of them are explained in depth
elsewhere here:
• Debt payback- Debt reduction is a duty for a nation to return the income in proportion to the
outstanding sum that has been borrowed for various reasons, the most common of which is to
spend. Money may take many forms, including money, securities, financial instruments, and so
on, and the United Kingdom keeps paying its obligations on time to avoid falling into a debt
spiral that further impede the nation's activities in the long haul (Briozzo and Albanese, 2020).
• Mergers and acquisitions- Acquisitions and mergers are crucial because they allow a company
that isn't functioning well at marketplace to cooperate with one that is, if both can be lucrative. It
also helps to lessen competition and, in certain situations, to get a greater part of the business.
The United Kingdom makes suitable advantage of this in order to succeed in the market,
allowing both nations to thrive and eventually benefit (Marozva and Makoni, 2021).
• Organic investment portfolio is a lengthy approach that typically takes years of paying off. To
make massive wealth, company leadership must choose which investing possibilities are
worthwhile. In most cases, stockholders designate managers to fund infrastructure decision
making; even so, large investors have a duty to oversee the above judgements in order to build
sustainable cost savings on the equity they assign to classified businesses on behalf of customers
and recipients (Haseeb, 2018).
3.4 Detailed analysis and evaluation of the economic aspect of the country
The economy of the UAE is mostly based on oil and its associated aspects, since it is one
of the world's top producers and exporters of the commodity. It implements a mixture
government economy system that is dependent on its oil and natural gas production in the
market, since this element accounts for roughly 77 percent of GDP and the bulk of the populace
at about 96 million people is worked in this industry. It has a Gross Domestic Product of US$414

billion (AED 1.52 trillion) and is the Near East's second-largest industry behind Saudi Arabia. In
addition, the country has met and exceeded its goal of incremental GDP growth, since it
continues to expand at a faster rate in the longer term than the prior year's performance. The
nation started exporting heavy crude, dates, natural gas, dried small fish, and other agricultural
products to countries like Japan, Iran, Switzerland, the United States, India, and Oman, while
importing machines and equipment, food, and chemical products, among other things, primarily
from the United States and India (King, Loncan and Khan, 2021).
The United Arab Emirates is a Middle Eastern nation between the Persian Gulf and the
Andaman Sea. Oman and Saudi Arabia are two neighboring nations. It is strategically located on
the southern entrances to the Strait of Hormuz, which serves as a global crude oil shipping route.
In the southeast, the United Arab Emirates is characterised by undulating deserts sand dunes and
hills. The administration is organised as a republic, with certain responsibilities allocated to the
UAE federal govt and others retained for member Dubai; the president is in charge of nation,
while the prime minister is the leader of the country.The United Arab Emirates has an extensive
market system with a free pricing system determining the prices for products. The Organization
of Arab States (Gulf States) and the Organisationof Islamic cooperation are both members of the
United Arab Emirates (GCC).
3.5 Detailed explanation and evaluation of the challenges that are faced by
the nation due to the trade and industrialisation policies
Industrialization- This is the most essential, vital, and skeptical element for any region that
wishes to expand in the industry, because it is a procedure that aids in the growth of industry
through the application of modern methodologies, that can be helpful in terms of enhancing the
amount of economy overall. There seem to be a variety of elements that contribute to its growth,
however the five key drivers are land, money, people, knowledge, and relationships, which all
work to help a nation become industrialized. It began in the late 18th century in regions of North
America and Europe, and then expanded around the world depending on the value it carries. The
UK is a well-positioned nation with very well and linked components to the rest of the globe,
allowing it to guarantee that all operations are oriented toward realizing the objectives set forth
from the outset. Industrializations aids a country like the UK in eradicating inequality by
expanding the use of technological advancements in the production of products and services,

which may then assist to raise the standard of life for the residents. There are some obstacles to
overcome on this journey, which are briefly described here.
• Inequitable revenue distribution- This is a scenario in which the difference between the affluent
and the impoverished comes with time and it is one of the most depressing conditions for a
society since recovery takes awhile. The UK is in a similar predicament, with the poor getting
poorer and the affluent getting wealthier day by day, negatively impacting the economic growth.
Because there is no system in place to guarantee that money is distributed properly, this element
becomes considerably more complex and demanding (Taylor, Wang and Xu, 2021).
• Emigration- This is a huge issue in the UK, as workers immigrate to other nations where there
are plenty of employment chances for everyone, allowing them to make a better lifestyle than
they are now obtaining in the UK. There are also no clear laws, rules, standards, or code of
behavior for businesses working there, making it impossible for workers to operate in such a
poisonous atmosphere.
Trade agreements are rules and regulations developed for dealing with other nations in order for
businesses to reach substantial growth by increasing market share. UK has a number of rules in
place to ensure that everything is checked thoroughly, and everything of them are detailed in full
here.
• Economic warfare: The UK adopts this strategy, which aims to damage the power systems of
other richer nations in order to assist the country expand and thrive in the lengthy period.
• Intellectual Property Theft- Because trade policies assist a business in expanding into new
countries by assisting the company in respond to new business environments, they are also a
source of industrial espionage. As businesses can steal others' plans, ideas, innovation, or
invention, this can be devastating to a nation like the UK, and so poses a significant economic
risk(Muhammad and et.al, 2021).
4 CONCLUSION
As per the above report it has been concluded that Global trade financing and investment is
one of the most important aspects since it allows businesses to reach new audiences and hence is
very important in the long term. From the foregoing, it can be inferred that the financial sector,

as well as its connected instruments and procedures, are extremely relevant in the current market
environment, and that each of them must be thoroughly examined so that they can contribute to
the firm's worth instead of detract from this. Besides that, it can be concluded from the foregoing
that the economies of the United Kingdom in good shape; although there are some areas of
worry, they are still well ahead of other nations.
5 RECOMMENDATIONS
According to the report it is recommended that organizations should employ a variety of
methods to obtain donations. If a country wishes to build its economy, it is also critical that
international commerce is the primary source of revenue. Trade and investment is another
important source of funding for them. It has the potential to be a significant driver in decreasing
global poverty by stimulating economic growth, generating employment, lowering costs,
broadening the range of goods offered to people, and assisting nations in acquiring new
technology. Along with follow all the appropriate theory in regard of the trade and investment in
international market because it helps to understand different markets in different countries.

6 REFERENCES
Books and Journal
Nguyen, A. T. and Cieślik, A., 2021. Determinants of foreign direct investment from Europe to
Asia. The World Economy. 44(6). pp.1842-1858.
Safi, A. and et.al, 2021. Does financial stability and renewable energy promote sustainable
environment in G-7 Countries? The role of income and international
trade. Environmental Science and Pollution Research, pp.1-13.
Cuong, H. V., Luu, H. N. and Tuan, L. Q., 2021. The impact of the shadow economy on foreign
direct investment. Applied Economics Letters. 28(5). pp.391-396.
Orji, A. and et.al, 2021. Does Foreign Presence Influence the Level of Firm Technical
Efficiency? Evidence from Africa. Econometric Research in Finance. 6(1). pp.1-20.
Fan, J. L. and et.al, 2021. Measuring the impacts of international trade on carbon emissions
intensity: a global value chain perspective. Emerging Markets Finance and Trade. 57(4).
pp.972-988.
Yao, Y., Chen, G. S. and Zhang, L., 2021. Local financial intermediation and foreign direct
investment: Evidence from China. International Review of Economics & Finance. 72.
pp.198-216.
Ambrocio, G. and Jang, T. S., 2021. The Impact of the Global Financial Crisis on Investment in
Finland and South Korea. Journal of Business Cycle Research, pp.1-17.
Qirjo, D. and Pascalau, R., 2021. Would economic growth affect air pollution in light of the
potential transatlantic trade and investment partnership. International Economics and
Economic Policy. 18(1). pp.127-156.
Akomea-Frimpong, I., Adeabah, D., Ofosu, D. and Tenakwah, E.J., 2021. A review of studies on
green finance of banks, research gaps and future directions. Journal of Sustainable
Finance & Investment, pp.1-24.
Raghutla, C. and et.al, 2021. Financing clean energy projects: New empirical evidence from
major investment countries. Renewable Energy. 169. pp.231-241.
Marozva, G. and Makoni, P. L., 2021. The nexus between bond liquidity, stock liquidity and
foreign portfolio investment. International Journal of Finance & Banking Studies (2147-
4486). 10(3). pp.92-103.
King, T., Loncan, T. and Khan, Z., 2021. Investment, leverage and political risk: Evidence from
project-level FDI. Journal of Corporate Finance. 67. p.101873.
Taylor, M. P., Wang, Z. and Xu, Q., 2021. The Real Effects of Exchange Rate Risk on Corporate
Investment: International Evidence. Journal of International Money and Finance,
p.102432.

Muhammad, F. and et.al, 2021. Influence of tourism, governance, and foreign direct investment
on energy consumption and CO 2 emissions: a panel analysis of Muslim
countries. Environmental Science and Pollution Research. 28(1). pp.416-431.
Briozzo, A. and Albanese, D., 2020. Voluntary audit, investment, and financing decisions in
Latin American small and medium enterprises. Journal of International Accounting,
Auditing and Taxation. 38. p.100302.
Haseeb, M., 2018. Emerging issues in islamic banking & finance: Challenges and
Solutions. Academy of Accounting and Financial Studies Journal. 22. pp.1-5.
Yan, S., Ferraro, F. and Almandoz, J., 2019. The rise of socially responsible investment funds:
The paradoxical role of the financial logic. Administrative Science Quarterly. 64(2).
pp.466-501.
Bhattarai, B. P., 2019. Determinants of commercial banks' lending behavior in
Nepal. International Journal of Accounting & Finance Review. 4(1). pp.51-60.
Ohrn, E., 2018. The effect of corporate taxation on investment and financial policy: Evidence
from the DPAD. American Economic Journal: Economic Policy. 10(2). pp.272-301.
Online
Domestic economy of UK, 2018. [Online]. Available through;
<https://www.statista.com/statistics/263613/gross-domestic-product-gdp-growth-rate-in-
the-united-kingdom/>
Capital allocation in UK economy, 2020. [Online]. Available through;
<https://blogs.imf.org/2018/12/04/the-uneven-path-ahead-the-effect-of-brexit-on-
different-sectors-in-the-uk-economy/>
Capital allocation in UK within International market, 2021. [Online]. Available through;
<https://citywire.co.uk/funds-insider/news/asset-allocation-in-the-turmoil-how-top-fund-
managers-do-it/a536145>

7 APPENDIX