Written by Tom Furber, economics tutor | Published 6th August 2026. | Updated 10th August 2026.
Contents
What is the pattern of trade?
The pattern of trade can refer to:
- Which goods and services each country exports and imports.
- The countries with which a particular country does more or less of its trade.
What are the UK’s main exports and imports?
Looking at the UK’s pattern of trade, examples of the UK’s main exports and imports include:
- Exports: business services, financial services and medicinal/pharmaceutical products.
- Imports: business services, transport services, cars.
- The UK also exports and imports a lot of mechanical power generators, as well as tourism (non-residents visiting and spending in the UK counts as an export).
- Business services could include legal services, accounting, consultancy and so on.
Who are the UK’s main trading partners?
UK exports by value in 2025:
- 21.8% of UK exports went to the US.
- Many of the next countries are in the European Union: Germany: 6.7%, Ireland: 6.1%; Netherlands 5.8%, France 5.2%. Adding up all EU members, 41.4% of UK exports by value went to the EU.
- Others include China 3.4%, Switzerland 2.9%.
UK Imports (by value) in 2015:
- 13.3% of imports into the UK came from the US.
- Germany 9.3%.
- China 7.6%.
- Netherlands 6.8%.
- In general, including Germany and the Netherlands, 49% of UK imports came from the EU.
Data are sourced from UK Government website, linked here (external link).
Factors influencing the pattern of trade between countries and changes in trade flows between countries
Comparative advantage
- A country has a comparative advantage in a good when it can produce that good at a lower opportunity cost (compared to other countries).
- Suppose a country has a comparative advantage in producing pharmaceuticals.
- For example, one of the UK’s main exports is pharmaceuticals, with the UK hosting large pharmaceutical companies such as GSK and Astrazeneca.
- Then the UK may be incentivised to produce goods where it has a comparative advantage. This is in order to export those goods in exchange for more imports, leading to the UK consuming beyond its domestic PPF.
- Example: Germany may have a comparative advantage in cars. So the UK can sell pharmaceuticals to Germany and the UK can buy cars from Germany.
- Comparative advantage may change over time, which may also influence changes in trade flows over time. For example, as demand for electric vehicles rises around the world, the managers of some German car companies have been criticised for slow adaptation to electric vehicles. This could mean fewer exports of cars from Germany in the future.
- More notes on comparative advantage.
Evaluation for comparative advantage influencing the pattern of trade:
- Other costs to trade, such as tariffs or transport costs, may limit the benefit of specialising according to comparative advantage. This may make comparative advantage less likely to explain trading patterns.
- Comparative advantages may change over time, making them a less reliable indicator of trading patterns at a given point in time.
- Even if a country has a comparative advantage in a particular good, the country may not end up specialising in that good. For example, even though the UK may not have a comparative advantage in certain industries, the government could decide to subsidise those industries.
Emerging economies
- Some emerging economies, such as Vietnam, have been able to produce manufactured goods at lower prices than advanced economies.
- This could be because of lower labour costs in emerging economies, being passed on to consumers with lower prices.
- This could lead to advanced economies importing more manufacturing goods from emerging economies.
- Meanwhile in advanced economies, there may be a fall in demand for manufactured goods because of a lack of price competitiveness. The UK for example has witnessed deindustrialisation, with falling demand for UK steel, cars and coal over time.
- The impact is not limited to manufacturing. Similar arguments could also be used for agriculture and some services such as call centres.
Evaluating the impact of emerging economies on trade patterns:
As these emerging economies grow and GDP per capita rises, wages may rise. [For example, as demand for exports grows, demand for labour rises owing to derived demand.]
- This may increase labour costs for these emerging economies.
- As a result, firms in emerging economies may have to pass on higher costs to international consumers by raising prices.
- This could reduce the extent to which emerging economies can compete on cost and price.
- This could mean the impact of emerging economies may not be permanent.
Growth of trading blocs and bilateral trading agreements
- Examples:
- Trading bloc: European Union single market.
- A bilateral trade agreement could include the UK-India trade deal.
- More trade within the bloc (trade creation) and less trade with countries outside the bloc, especially where common external tariffs are in place (trade diversion).
- Specialisation within the bloc may also occur owing to reduced trade barriers, which makes specialisation according to comparative advantage more likely to lead to “gains from trade”.
- More notes on trading blocs and trade agreements.
Evaluating the impact of trading blocs / trade agreement on trading patterns:
- Nature of the trade agreement: Trade agreements may have limited scope. For example, a trade agreement may not eliminate all trade barriers, keeping non-tariff barriers or even some tariffs in place. This may reduce the extent to which imports or exports change after a trade agreement.
- Geographical proximity of two countries could be more important than trading blocs. For example, France and Germany may trade with each other because they are bordering countries, with more workers moving between the two countries and lower transport costs. This is the prediction of the “gravity” theory of trade. So, we could be incorrectly attributing trade patterns to trading blocs, when in fact, it is because of geographical proximity.
- Common external tariff: Trading blocs may lead to more specialisation within the bloc, but less specialisation relative to countries not in the bloc, owing to common external tariffs.
Changes in exchange rates
- An exchange rate is the value of one currency in terms of another.
- For example, the pound has fallen in value against the US dollar by about 25% from June 2014 to June 2024.
- A depreciation in the pound could increase demand for UK exports and reduce demand for imports into the UK.
Evaluating the impact of changes in exchange rates on trading patterns:
- J-curve or Marshall Lerner condition – see the notes on exchange rates for more.
- For example, if the PED of exports and the PED of imports sum to 1 exactly in absolute value, then the value of net exports may be unaffected by fluctuations in the exchange rate. This could reduce the explanatory power of exchange rate movements for explaining trading patterns.
- Also, consider whether the change in the value of the currency is temporary or permanent.
- Finally, a depreciation against one currency may not suggest a depreciation against all currencies. For example, in theory the pound could depreciate against the dollar, without the pound depreciating against the euro. So a pound depreciating against the dollar may predominantly affect US-UK trade flows only.
Practice question on the pattern of trade (Edexcel A style)
Here is a practice question, preceded by a short extract. It is suitable practice for Edexcel Economics A students.
Extract A: The UK’s pattern of trade in goods.
In the 12 months to the end of May 2026, the UK exported:
- £46.3 billion of intermediate mechanical power generators.
- £37.4 billion of medicinal and pharmaceutical products.
- £27.2 billion of cars.
Over the same period, the UK imported:
- £47.7 billion of cars.
- £33.5 billion of intermediate mechanical power generators.
The UK benefits from large pharmaceutical companies such as GSK and Astrazeneca, as well as from research partnerships with and skilled workers from the UK’s top universities.
Sources for figures (external link): gov.uk website on UK trade in numbers.
Question: Referring to Extract A, evaluate the factors influencing which goods the UK exports and imports. (15 marks)
Related resources for Edexcel Economics A
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