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What Britain Buys and Sells In A Day - Ed Balls in the docks

What Britain Buys and Sells in a Day

Our trading relationships face their biggest change in decades. How much do you know about our imports and exports?

About the programme

In this three-part series, presenters Ed Balls, Ade Adepitan and Cherry Healey delve into the hectic world of Britain’s imports and exports. They explore the science and systems that allows Britain to import and export goods around the world on an unprecedented scale.

What Britain Buys and Sells in a Day will be broadcast on Mondays at 9pm on BBC Two from 30 September 2019. To find out more, or to watch on BBC iPlayer, visit the BBC programme page .

Discover the range of qualifications and modules from the OU related to this programme: 

What Britain Buys and Sells In A Day presenter Ade Adepitan, picking grapes

Discover how our changing tastes influence the way supermarkets stock their shelves.

How our love of new foods drives a world supply chain

Dr Stuart Parris explores how we rely on food imported from outside the UK and identifies trends which supermarkets have had to adapt to.

The familiar sight of plentiful and varied produce at the supermarket is the outcome of a complex system. Most of the time the system able to respond to ever changing demands from consumers by coordinating supply from all over the world so that it arrives fresh and ready to eat. Our increasing demand for variety in our diet presents growing environmental challenges, with food travelling great distances to reach us. Unexpected events whether climatic, economic or political can disrupt the system of supply and very quickly result in excess produce that goes to waste, or shortages that force up prices, or even in some cases result in the surprise of an empty supermarket shelf.

You can find out more about what causes food prices to spike or how to analyse the impacts of changing consumer tastes in our new Open University module, Economics in Context.

Photo by nrd on Unsplash

With demand still running high for cauliflower, this created a substantial shortage and cauliflower prices reportedly spiked by up to 400% with risks of shelves running empty.

Every day, millions of people in the UK will visit a supermarket, arriving with the expectation it will have fresh produce of the type, taste and crucially at the price they are willing to buy. The process that ensures supermarket customers get what they demand involves complex logistics and suppliers producing fruit and vegetables across the world. 

To satisfy our demands, supermarkets have evolved complex international supply chains robust enough to meet our consumer demands all year round. These supply chains include UK produce when available, but, and more likely, producers in other countries, such as France, Spain or Israel, or as far away as Peru, Kenya or China where climates allow for cultivation of produce that either we cannot grow in the UK, or we can only grow for certain months of the year.   

For example, thinking of UK seasons might conjure up images of spring asparagus, or summer strawberries, yet such ingredients increasingly feature on our Christmas lunch shopping lists. Although UK farms have innovated to extend the traditional UK growing season, much produce is imported to the UK from abroad in order to keep us supplied with ‘seasonal’ fruit and veg throughout the year, including produce like strawberries and asparagus.

Our never-ending demand for ‘seasonal’ produce, means our weekly shopping basket may contain goods that have travelled many miles to reach the supermarket shelf. Recent emphasis on the environmental damage associated with food miles and greater interest in regional provenance has increased consumer demand for locally farmed produce. But the UK simply doesn’t have the capacity to produce all the food we demand, particularly in terms of the variety of produce we seek all year round. Without significant changes to our diet, the UK will continue to rely heavily on food imports.


Photo by Eduardo Soares on Unsplash

Importing fresh produce to the UK is nothing new. Thanks to technological development of steam ships and refrigeration in the late 1800s, fresh produce could be transported over great distance and still arrive ready to eat.  As early as 1890, importers based in Liverpool and London were shipping bananas from places such as the Canaries and Jamaica (Abbott, 2009). To start with, bananas in the UK were exotic and luxurious and only affordable for a few. As people tried and liked the fruit, demand grew, companies set up business to ship in more bananas. Import volumes increased, bananas became more affordable. Nowadays demand for bananas is huge, with billions of them imported to the UK every year and used as a relatively cheap staple of the household fruit bowl. 


Photo by Igor Miske on Unsplash

Technological improvements in transport logistics and shipping have made it possible to import fresh produce from across the world with relative ease, such that it is possible to respond quickly to our ever changing consumer tastes. Certain foods can quickly find they are on-trend causing a surge of demand and putting pressure on suppliers to find stock at affordable prices. Recent consumer trends  around eating well as well as animal welfare and social and environmental concerns about meat production, have encouraged uptake of vegetarian and vegan diets, impacting on consumer demand which is pushing supermarkets to locate a greater variety of vegetables. UK demand for avocado and avocado smash has surged in recent years, 100% of which is imported from places like Mexico, Chile and Peru. Likewise, UK consumers have sought out new culinary experiences to increase vegetables in their diets. 

A rush to try out ‘courgette spaghetti ’ in early 2017 caused an unexpected run on courgettes, emptying supermarket shelves as coincidentally a cold weather snap hit the availability of imports, pushing up prices. In addition producers in the UK and overseas cater directly for shifting UK preferences towards sweeter seedless  types of grapes or smaller crisper  apples. All these factors help shape the UK demand for fruit and veg to which supermarkets respond by searching through their supply chains to source fresh produce available at prices customers are willing to pay. 


Cooked cauliflower dish with herbs

Photo by Karolina Kołodziejczak on Unsplash

More recently, even the humble cauliflower, a loved or loathed part of a British Sunday lunch has returned to fashion, reinvented as ‘cauliflower steak’ and ‘cauliflower shawarma’ (boiled, roasted, then BBQ’ed cauliflower head).  But working out what trends will stick is a difficult business. Seeing consumer interest in cauliflower, M&S introduced a prepacked cauliflower steak product, sold for £2-£2.50 as a convenience dinner. Customers soon noticed it was far cheaper to buy a whole cauliflower and better for the environment (far less plastic). There wasn’t enough demand for it and M&S quickly dropped  the ‘steak’.

Despite the demand, growing cauliflower in the UK is a risky business . Cauliflower prices have fluctuated considerably over the last decade due to weather and competition from cheap imports. Cauliflowers can grow well in the UK but are sensitive to the UKs changeable weather; too much heat, or too much rain can create havoc with yields and a ripe crop spoils quickly in the field. 

In 2017, a year of extreme weather, a cold snap, followed by a heatwave, caused a glut of ripe cauliflowers from UK farms. UK farmers responded by exporting more crop and cut prices to try and encourage greater consumer demand, yet such was the excess of supply (where supply is much greater than demand) some farmers decided it wasn’t even worth harvesting their crop. This year the weather has also been unkind to cauliflower growers, excess rainfall destroyed UK crops , and a European heatwave  causing problems for imports. With demand still running high for cauliflower, this created a substantial shortage and wholesale cauliflower prices reportedly spiked by up to 400% with risks of shelves running empty.


Shopping trolley in car park

The familiar sight of plentiful and varied produce at the supermarket is the outcome of a complex system. Most of the time the system able to respond to ever changing demands from consumers by coordinating supply from all over the world so that it arrives fresh and ready to eat. Our increasing demand for variety in our diet presents growing environmental challenges, with food travelling great distances to reach us. Unexpected events whether climatic, economic or political can disrupt the system of supply and very quickly result in excess produce that goes to waste, or shortages that force up prices, or even in some cases result in the surprise of an empty supermarket shelf.

You can find out more about what causes food prices to spike or how to analyse the impacts of changing consumer tastes in our new Open University module, Economics in Context.


How the UK pays its way

Alan Shipman looks at the sectors which generate the UK's revenue and how this has changed over the years.

In 1919 John Maynard Keynes – writing The Economic Consequences of the Peace and revealing at the lifestyle of Bloomsbury economist - marvelled that “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and expect their early delivery upon his doorstep.”

A century later, online retailers have spread the privilege beyond London, and massive reduction in long-distance transport costs has globalised many products that used to be made or grown at home. Even the British-badged cars on our streets, fruit on our shelves and fish on our plates are part of global industries, arriving through long supply chains. They’re also continually refined and redesigned as customer demands and production costs change.

Motor vehicles, and Food and Drink, are two of the UK’s biggest manufacturing sectors. You can see the extent of their internationalisation in the tables below.

Food and drink

Imports (£bn):    47
Exports (£bn):     23
Trade deficit (£bn)24
Share of UK exports (%)8
% sector exports to EU   70
Direct employment (Thousands): 440
Indirect employment (thousands)4,000
[Includes Agriculture (thousands)400]
Share of GDP (%)1.5

[Sources: Grant Thornton/Food & Drink Federation; DEFRA; Oxford Economics].

Motor vehicles

Imports (£bn):    57
Exports (£bn):     44
Trade deficit (£bn)13
Share of UK exports (%)14
% sector exports to EU   53
Direct employment (Thousands): 168
Indirect employment (thousands)856
Output growth (% 2018) -1.5
Share of GDP (%)              0.8

[Sources: Society of Motor Manufacturers & Traders; Oxford Economics].

Despite selling their products around the world, these sectors – and UK manufacturing as a whole – import significantly more than they export. So how does our economy stay afloat?

UK international trade: the bigger picture

Cargo ship at sea from above

The UK spends more on imports than it receives from selling exports, for most types of product, meaning it runs an overall deficit in industrial and agricultural trade. For food and drink, the deficit was around £24bn in 2018.  For cars, around £13bn . The weakening of the pound in 2016-19 may help to narrow the gap, by making exports cheaper abroad (and imports more expensive at home, but that hasn’t yet happened – partly because some of the imports (like tropical fruit) can’t be grown at home, and others are inputs or ingredients for products we aim to export. 

These overall sector deficits tend to conceal a lot of two-way trade. Big apples or cars get exchanged for smaller ones, the fish we catch around our coast are mostly traded for the ones caught elsewhere in Europe, which we prefer with our chips. And there are still some UK industries that run a trade surplus – such as Scotch whisky pharmaceuticals  and film .

Overall, however, the UK runs a wide deficit in manufactured goods, importing more than it exports, and has done so every year since 1983 . Our ‘raw’ agricultural trade is also in perennial deficit , with barley the only net export.

Narrowing the trade gap: Net export of services

Canary Wharf at night

When giant freighters leave UK ports at the end of the day, much of their cargo space is empty. The UK trade deficit in goods was £139bn in 2017  and reached £149.2bn in the 12 months to June 2019 .

But the overall trade deficit looks much healthier after the addition of commercial services, in which the UK runs a persistent surplus of exports over imports. Our net ‘invisible’ service export reached £113bn in 2017 .

Financial services are the largest contributor, comprising 21% of service exports in 2017 . When related professional services (including law, consultancy and fast-emerging ‘fintech’) are added to banking, insurance and wealth management, finance had the largest trade surplus of any sector: £61bn in 2017 , according to industry association TheCityUK.

Financing the remaining gap: Inflows of investment

A pound coin on a black background

Even with its large service-trade surplus, and additional income flows from overseas investment, travel services and tourism, the UK spends more money abroad each year than it receives from abroad. This gap shows up in its Current Account, which showed a deficit of £81.6bn in 2018  and £30bn (5.6% of GDP) in the first quarter of 2019 .  

The UK might seem to be living beyond its means, by consistently buying more from other countries than it can sell to them. But over 30 years of current-account deficits have not stopped the economy growing, or undermined the strength of the pound. The UK is unusually successful in selling assets to pay for current purchases, so that other countries keep transferring us the funds with which to buy their goods.

This is shown on the UK’s Financial and Capital Account, the counterpart to the Current Account, which has been consistently in surplus since the 1980s. There have been consistent net inflows of foreign direct investment (FDI) and foreign portfolio investment (into shares, bonds and other financial instruments), along with capital gains on the stock of foreign assets (real and financial) held by UK-based investors.

In 2017 (the latest year for which detailed data is available), the UK received inward direct and portfolio investment equivalent to 23.5% of its GDP, while its outward investment reached only 19.7% of GDP . This net inflow financed the current-account deficit, which had narrowed to 3.9% of GDP (from a record 5.2% in 2016).

If the rest of the world keeps investing more in the UK than the UK invests abroad, there could eventually be a net outflow of interest and profit, adding to the strains on the current account. Foreign ownership of UK assets moved into line with UK ownership of foreign assets in 2016 , ending a long phase in which assets abroad comfortably exceeded liabilities. In 2017 the UK’s £1.31 trillion stock of outward FDI was slightly below the £1.33 trillion that had flowed into it .  

The UK can still use this to pay for its excess of imports over exports, however, provided it generates enough income from its still sizeable foreign assets. When the current-account deficit narrowed sharply in 2017, it was mainly due to a strong rise in net earnings on the UK’s foreign direct and portfolio investments .  Financing the current-account deficit with capital inflows is substantially more comfortable than closing it, which would require a weaker pound to boost our exports and a slowdown in growth to curb our appetite for imports.

Braced for Brexit

A poll card for the UK referendum on leaving the EU

A poll card for the UK referendum on leaving the EU

The UK’s import and export patterns were re-shaped after it joined the European Economic Community in 1973, and especially after this enlarged from the original 6 to today’s 28-member European Union (EU). In 2018 the EU was the destination for 46% of UK exports and the source of 53% of its imports . The US, our next largest trade partner, receives around 18% of UK exports and supplies 11% of its imports . UK traders also benefit from the network of free trade deals negotiated by the EU with other fast-growing economies  - though, notably, not with the US.

The concentration of UK trade on the EU reflects a close association between trade and geography, even in a globalised world. The size of trade flows between countries has been found, all over the world, to vary directly with their economic size and inversely with the distance between them . So the US, because it is further away, takes only slightly more exports from the UK than Germany and is actually a smaller source of imports. 

Economists do not all agree that trade flows must be bound by this ‘gravity model’, especially as the trade in ‘weightless’ services out-grows that in physical goods. Some argue that the UK’s concentration of trade on the Europe is a result of its focus on deepening EU trade ties, rather than the cause.

Despite this, many UK traders are cautious about a Brexit that moves us too far outside the Customs Union, which removes tariffs on exports between EU members, and the Single Market, which standardises rules and eliminates non-tariff barriers. Departure from these raises the possibility of goods being delayed at the EU border by extra checks, or made more expensive by tariffs.

Meet the OU experts

Dr Paul Walley, The Open University
Dr Paul WalleyDirector of Learning, CPRL - The Faculty of Business & LawVIEW FULL PROFILE
Dr Paul Walley, The Open University
Dr Paul WalleyDirector of Learning, CPRL - The Faculty of Business & Law

My research is particularly interested in the transfer of contemporary operations management practices, such as lean thinking, from the private sector into public sector organisations.  

I've done significant research into healthcare management, publishing a number of reports into the design and improvement of healthcare systems.

The current focus of my work is to study the ways in which police services manage demand and capacity.

A silhouette of someone whose picture we don't have on file
Dr Stuart ParrisAssociate Dean (Curriculum, Qualifications & Partnership) - Faculty of Arts & Social SciencesVIEW FULL PROFILE
A silhouette of someone whose picture we don't have on file
Dr Stuart ParrisAssociate Dean (Curriculum, Qualifications & Partnership) - Faculty of Arts & Social Sciences

My research interests focus on the empirical investigation of the relationship between finance and innovation. 

In particular I am interested in the process of funding innovative firms operating in the clean technology and biopharmaceutical sectors and the implications of different types of finance on the innovation process.

Alan Shipman, The Open University
Alan ShipmanSenior Lecturer - Economics, Art & Social SciencesVIEW FULL PROFILE
Alan Shipman, The Open University
Alan ShipmanSenior Lecturer - Economics, Art & Social Sciences

I'm focused on macro-economics, especially how it interacts with political power - with an interest in the impact of the original (‘1992’) Single Market programme, industrial supply chains, and the recent ‘global value chain’ research which links company and industry studies with macro-level trade analysis. 

Author of The New Power Elite, a study of how elites exploit and manage social divisions to settle their own top-table disputes.

I'm involved in course design at all levels, usually trying to put more macro-economics into the curriculum, and finding ways to combine economics with other social sciences for joint degrees (especially Politics, Philosophy and Economics, for which he is Qualification Lead.

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