Economics Assignment - Essay Example

The reasons for the balance of payments deficit are many and varied. However, in simple terms, it can also be said that the people in the country consumes more than what they produce. Some of the areas that the UK has always been traditionally strong in the past no more hold good now. For example, at least until 1980, the UK had a vibrant and competitive manufacturing sector with ever-burgeoning exports across the world. As time passed by, the manufacturing sector began losing its grip on the international markets on cost, innovation and quality aspects.

It is a fact that in growing economy, energy needs of the country also keeps on rising and when domestic resources are not sufficient enough to meet those rising energy needs of the country then the country is forced to import the same. It is pertaining to note that before 2004, the UK was exporting oil and gas being an energy surplus country; however, the production of gas and oil went on falling since 2004 onwards. Due to reduced production, not only it lost the status of energy exporting country but also it became a net importer to meet its energy needs.

The above mentioned graph shows how production went on falling since its peak in year 2000 with almost steady consumption in all these years. It is obvious that all energy shortfalls should be met with imports. The year-wise energy imports have been presented in the table as per the following. Chakrabortty (2011) argues that the manufacturing sector in the UK has reduced in size significantly. Currently, the manufacturing sector constitutes only 11 percent of the national income employing only 2.

5 million people. The de-industrialisaiton has happened because industries have not remained competitive enough and in the era of liberalization much of the industrial activities have moved to the third-world countries such