The trade gap is the difference between the goods and services which this country sells to other countries and those which it buys from other countries.
This country has run a trade deficit for 30 years and it is getting bigger.
Sooner or later, if we are to pay our way in the world, we need to close that gap but the reality is that we do not sell enough goods and services in the UK.
It matters, because in the long run, countries which have a trade surplus have a higher standard of living than those which don’t.
A new report says that government has to work more closely with business if we are to overcome this problem.
The report was written by the chairman of Westland at the request of the Labour Party and it shows that we need reforms to government bodies dealing with exports, more focus on trade and investment in education, and a one-stop shop that simplifies export support for small and medium-sized businesses.
The crisis in Greece also shows how important it is to get our exports right.
In the long run we need to return to being a nation of traders and of course with the Port of Liverpool expanding Merseyside is in a strong position to lead the recovery.
We have also seen low productivity in the last few years.
So for all the talk of economic recovery, this shows people are working longer but not making or doing things more efficiently.
Falling productivity is caused by a lack of new skills, failure to invest in new technology, poor transport and other public services and lack of support from the banks.
There is only so long that companies and their staff can continue to work harder without the kind of support that is needed from outside and unless we improve productivity, any recovery will grind to a halt.
If we are to have a high skill, high wage economy and see rising living standards, we need to improve trade and productivity.
The government has a massive role to play in both and in the emergency budget, the chancellor will need to make to support gains in international trade and in productivity if he is to reverse the long term trend toward lower wages and lower living standards in this country.
Do you like this post?