Impact of COVID-19 on UK Trade, FDI, and Economic Growth (MD4099)

This academic essay examines the profound impact of the COVID-19 pandemic on the United Kingdom's international trade. It begins by defining globalization and sets the stage for a detailed analysis of how the pandemic has disrupted UK trade practices, leading to significant falls in imports and exports. The essay provides macroeconomic data, including specific examples from the transport, machinery, and manufacturing sectors, illustrating the decline in trade with both EU and non-EU countries. It further explores the implications of these disruptions on the UK's trade relationships, including the impact on key trading partners like China and the United States. The essay delves into the overall economic implications, assessing the UK's response through economic policies, and concludes with a discussion on the country's long-term economic growth forecast and its position in the global economy. The analysis incorporates insights from various economic principles and provides a comprehensive understanding of the challenges and adaptations in international trade during the pandemic.

Individual academic
essay

Table of Contents
INTRODUCTION...........................................................................................................................3
Global view to a national view, to include macroeconomic data...........................................3
Detailed example (either a company or industry example) to support the points you are
making to provide practical insights.......................................................................................5
Overall implications - is that country rethinking its international trade strategy to reduce their
vulnerability............................................................................................................................8
CONCLUSION..............................................................................................................................11
References......................................................................................................................................12

INTRODUCTION
Globalisation is the term that is used for describing the growing interdependence of the
world’s economies, populations and cultures that are as a result of cross border trading of goods
and services, flow of investment, information and people (Leite, Lindsay and Kumar, 2020).
Countries are willing to built up economic partnerships so that there can be facilitation of
movements across centuries. The wide ranging of effect of globalisation is politically charges
and highly complex. With the major technological changes globalisation is benefiting the society
but there is harm cased to certain groups (Kathiresan, Nagai and Haneishi, 2020). Preset report
deals with the essay writing on the international trade that has contacted with higher FDI
projected by 40 percent in year 2020. further there is evaluation of the impact of COVID-19 on
the trade and economy of a country.
Global view to a national view, to include macroeconomic data
The COVID has impact the UK trade practises in terms of flowing of goods and services
that has lead to a notable fall in imports and exports in the three months since April 2020.
In UK excluding all the non monetary gold and other types of precious materials there has been
fall in total exports by 33.1 billion pounds that is 19.3 percent in the coming time period of three
months. In April 2020 the imports fell by 29.9 billion pounds that is 17.6 percent that is one of
the highest falls since 1997 (Williams and Kayaoglu, 2020).
The fall in imports and exports was seen in the transport and machinery equipments,
miscellaneous manufactures & fuels. The trends are to be consistent with the shutdown of the car
manufacturing plants share fall in the global demand of oil since April 2020.
The decline in trade with both European Union and the non European Union countries is
varied with line that is leading to severity of restrictions that is introduced by national
government response due to the COVID pandemic. According to the findings from Business
impact of COVID survey (BICS) reflect that largest impact has been on importing and exporting
of business that is because of storage, retail, transportation, manufacturing and retail industries.
In the year 2019 the UK underlying total trade balance remain in deficit with the gradually
narrowing of the trade and food deficit that lead to falling of imports in the fourth quarter in
December 2019.

With the starting of 2020 UK top trading partners have been affected by the covid pandemic. In
year 2019, 52.9 percent of UK total imported of goods 45.7 percent are from EU countries and
45.7 percent of total goods exported went to European union countries (McKibbin and Fernando,
2020). In EU the top trading partners in 2019 includes countries such as France, Germany and
Netherlands. UK largest trading partners in terms of imports and exports are the china and
United States.
With the first case of corona virus that was in November 2019 and was reported that year there
has been a subsequent global spread and there has been falling of UK total import & exports
(Keulertz, Mulligan, and Allan, 2020). The magnitude of impact is varied fir various services
and commodity types. UK has also introduced rigours social distancing & knock-down measures
to combat with the pandemic.
Early data is suggesting that trade in services has been affected severely because of this
pandemic situation. Trade in services had the largest fall in imports and exports.

Detailed example (either a company or industry example) to support the points you are making
to provide practical insights
Global lock-downs and the closure of borders further affect the tourism as there were no flights
and ships. With 9 out of 10 flights were grounded in UK in lock-down situation. The air
transport saw a monthly fall by 92.8 percent (Uğur and Akbıyık, 2020). Such restrictions have
resulted in falling of both transportation and travel services. Other types of services have also
been heavily affected by these situations. Such as trade in goods has seen a largest fall in April
2020 that is monthly exports fallen by 3.7 billion pounds and import has fallen to 6.5 billion that
is 18.4 percent.
(Source: UK could remain top 10 global economy in 2050)
Transport equipment and machinery has seen the largest impact that is exports and imports
falling 7.1 billion that is 20.4 percent and 5.6 billion that is 13.5 percent respectively.

These falls are aligned with the shutdown of car manufacturing sites that lead to decline in
production in UK in April that lead to a monthly fall of 36.2 percent of equipment and machinery
and there has been 50.2 percent in transport equipment (Morton, 2020).
The society of motor manufacturers and traders (SMMT) has record similar falls in April as there
were only 152 cars that were built for export as compared to 57,315 in April 2019.
UK trading relationship with other countries:
There has been a fall in the UK trade with both EU and non EU countries. Falls in exports with
chain has been predominating observed in March and February. Exports on March has been
fallen by 0.8 billion pounds that is 34.7 percent and import by 1.2 billion pounds that is 30.5
percent as compared to January 2020. China & UK has aligned with the fall in trade because of
the earlier lock-down measures that has been implemented by China (Nash, 2019).
Trade with united states have seen a largest fall in imports and exports in the April 2020 with
exports falling to 1.3 billion pounds that is 30.2 percent and imports to 0.9 billion pounds that is
24.2 percent (Pütü and Paksoy, 2020). These falls in trade are because of later lock down
measures that have been implemented by US and UK. Fall UK imports and exports can be
notably seen in transport and equipment, material, manufactures and miscellaneous
manufacturers. EU is the UK largest trading partner and EU countries entered the lock-down
measures at the same time. The fall in imports with key trading partners includes France, Italy,
and Ireland, span, Netherlands has seen similar falls since March 2020 (Jerónimo and Monteiro,
2017).

(Source: UK could remain top 10 global economy in 2050)

Overall implications - is that country rethinking its international trade strategy to reduce their
vulnerability
The defining feature of global economy since 1970 has been to focus on the concepts of
globalisation that is bring together of the economies predominately with more liberal trade flows.
The global volume merchandise trade has slowed down and has been worst in the present year
(McCormack-George, 2018).
According to views of Prof, Rocahrd Portes, professor of economics at London business
school there seem to be some of the obvious changes that are taking place because of the
organisations are willing to assume higher risks. Only some of the supply chains have disrupted
because of the covid 19 impact. Many of the factors that have been hit hard include the
manufacture of durables like motor vehicles, equipments, travel and professional business
services and air transport. Such sectors have been hit really hard because of the fall in demand
and higher disruptions in supply (Deschuytere, 2019). The COVID 19 shock comes with a
challenging juncture of trade policy across globe and in UK. In UK the shock to trade potentially
dovetails with further shocks that are caused by exiting from the single market of UK. At the
global level the effect of pandemic is to generate a free economy from restrictive trade policies
by reduction of export restrictions on items such a Medical equipment, food and medicines
(Baxter, 2017). There has been development of a new framework that is leading to interaction
between pandemics and globalisation. Globalisation has affected by pandemic in form high risk
of deaths and infection that is prevailing for each individual across countries (Champagnie,
2020). There are unhealthy interactions that are occurring abroad in a healthy country and
reducing the percentage of population infected because of pandemic (Lamond,and Reid, 2017)
(Halliwell, 2019).
The present scenario with the direct intention that is dominating the word globalisation has
resulted into future trade and value chain disturbances (Sovacool, Del Rioand Griffiths, 2020).
From the above discussed statements there are some of the summarising conclusions that
can be made. First is the UK underlying total trade balances has remained deficit in the year
2019 and this efficient is going to continue in the year 2020 because of the covid-19 pandemic.
In the starting of 2020 all the top trading partners were performing great but with the end of
quarter in March there have been a complete decline in the total exports across European Union.

There have been certain trade related measures that include the temporary export bands and
reduction and the import tariff on some of the commodities. But these measures are also not
leading to improvement of the present economic position of United Kingdom in coming time
period of 2021 (Kathiresan, Nagai and Haneishi, 2020). End of April 2020 the hundred percent
Global destinations has imposed many travel restrictions and this has led to a decline in the
travelling industry across 80 countries in the world and all the custom territories have also
introduced the export restrictions according to the reports that have been published by World
Trade Organisation). United Kingdom is also affected by this because there has been no
International travelling which has resulted into complete breakdown of the airline industry in the
year 2020.
 In the year 2021 now the economy of UK is predicted to grow by 5.9 % with the prior
guidance of 6.3 % that is a report according to the funds latest world economic Outlook
that was published in the year 2020 in October (Power, 2020). United Kingdom can be one of the fastest growing G7 economies up to the year 2020
with the average annual growth that is estimated to be 1.9 %. The world economy is
projected to double by the growth of annual rate by 2.5 % in the year 2050.
 United Kingdom’s long-term economic growth can outpace the leading European
Federal countries like France Italy Germany even the despite of intermediate term direct
from brexit. If there is measurement instead of GDP at activity transaction rates United
Kingdom can fall from 5th to ninth place by 2050 but either measure UK will stay at top
10 worldwide system (Harwood, 2016).
United Kingdom positions in mainly continuous by the projected large working
its share of the population as compared to other advanced and developed economy. After
a year of the major political shocks such as European Union referendum and the elections
exit covid-19 the long-term orientation is crucial for preparation the issues such as
Healthcare energy pension and climatic change. The government at United Kingdom is
now looking on the far side of uncertain economic and political cycles by focal point on
long term growth projections that are more certain as compared to short term forecast.
 Further the relative positive long-term growth projection for United Kingdom will be
reflected favourable demographic factors so that the flexible economy can be protected

by successful trade. There can be higher investment links with emerging economy and
recruitment of talented workforce across world.

CONCLUSION
It can be summarized that the restrictive measures across countries have disrupted the
overall global trade flow. There is need to make a detailed analysis of the magnitude of this
impact is that there can be analysis of the insights on trading businesses. Trade in services have
seen a large fall in order business services, transport services and travel services. Apart from this
trade in goods saw a large falls in machine, conveyance equipment, fuels and assorted
manufacturers. The serial falls of both imports and exports across all the good groups gave to be
consistent with the evidence from broad economic system. The grounds from UK business
indicates that importing and exporting were particular impacted by industries, storage, retail,
wholesale, manufacturing and transportation, the evidence also signifies that COVID has
resulted in higher transport restrictions and high installation costs that is one the biggest
challenges for importing and exporting as faced by UK business. That is leading to higher
challenges for Economies to sustain in the changing external environment.

References
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