The case for a possible Brexit and its impact on the UK economy is one that has been widely discussed over the years, given the significant economic effects it imposes on both parties involved. The UK taking up its membership into the EU in 1973 following its establishment in 1967 enabled vast benefits of free trade to be shared amongst members of this trading bloc. However, over a quarterly time series from 1999 to 2014 the UK has been noted to have run a relatively large balance of trade deficit in terms of its trade in goods with the EU (see figure 2), and as such lays emphasis on the UK’s lack of competitiveness, specifically in its manufacturing industry.

The importance of the EU has increasingly become more significant in terms of the UK’s total economic activity, generated through trade transactions.

Figure 1: ONS

As seen in figure 1, there has been a downward trend in the transaction with the EU expressed as a percentage of UK GDP, falling by 231.25% from Q1 of 1991 to Q4 of 2014.

In relations to the total trade in goods with the EU, there has generally been a deficit, which increased by 874.9% from 1999 to 2014. From figure 2 it can be observed that the largest deficit of -£21500m occurred in Q4 of 2014 and the lowest in Q4 of 1999. Figure 2: ONS

The persistent balance of trade deficit seemed to be a result of imports from the EU to the UK exceeding exports. This could be the case as the percentage increase in exports from transactions made by the UK to the EU was only 43.2%, whereas imports rising by 104.92% from 1999 to 2014 were substantially higher. In this instance, figure 2 may be closely interlinked with figure 1 in trying to explain the reason for a downward trend in the UK’s transaction with the EU expressed as a percentage of GDP. As UK imports exceed exports it implies that countries within the EU demand less of