Balance of trade: what it means
The value of a country's exports minus its imports. A negative balance is a trade deficit.
The balance of trade is exports minus imports, for goods, services or both. When imports are larger, there is a trade deficit. The ONS publishes UK trade monthly, and HMRC publishes detailed goods trade by product and partner country.
Why it matters when checking a claim
- Goods only, or goods and services? The UK usually has a deficit in goods and a surplus in services, so the total can look very different from the goods-only figure.
- Precious metals. Large movements of non-monetary gold through London can swing the totals. The ONS publishes figures excluding precious metals for this reason.
- Different sources, different numbers. HMRC's trade in goods statistics count goods crossing the border; the ONS adjusts these to a balance of payments basis. Bilateral figures also differ from partner countries' own data.
- Prices or volumes? A bigger deficit in current prices can reflect higher import prices rather than more imports.
See what is the UK trade deficit and the UK trade statistics guide.
Also searched as: trade deficit, trade balance, trade surplus, balance of trade meaning
Questions that use this term
- What is the UK trade deficit?
- Who is the UK's biggest trading partner?
- How do I look up UK trade data by country or product?
Related terms
- Current account (balance of payments): The UK's net position on trade in goods and services, plus income flows such as investment earnings and transfers with the rest of the world.
- Cash terms: A money figure stated at the prices of the time it refers to, with no adjustment for inflation. Also called nominal terms.
- Chained volume measure: The ONS method for showing GDP and other output after removing price changes, by linking year-to-year volume changes together. This is 'real' GDP.
More inflation, prices and the economy terms: CPI (Consumer Prices Index) · CPIH · RPI (Retail Prices Index) · Core inflation · Nominal GDP · Chained volume measure · Purchasing power parity (PPP) · Bank Rate · Quantitative easing (QE) · Quantitative tightening (QT) · GDP deflator · Output gap.