The Behaviour of UK Imports of Manufactured Goods∗

In this note we discuss the behaviour and determinants of UK imports of manufactured goods, focusing particularly on the period since the end of 1979. The behaviour of imports has important short and long-run implications for the rest of the economy. Attention is frequently focused on imports of manufactured goods and the UK's worsening net trade position in such goods, which has moved from a surplus of about 22 billion in 1982 to a deficit of around £4 billion (or a balance of payments basis) in 1984. One of the outstanding features of import behaviour is the persistent upward trend in the ratio of manufactured imports to ‘final demand’ (chart 1). We hope to throw some light on whether this long-term trend is due merely to increased international specialisation in production and lower tariff barriers or is indicative of an endemic weakness of the UK manufacturing sector in terms of non-price competitiveness.