Over the last years, the United Kingdom has been Romania’s most important foreign trade partner, with which we have managed to record a significant trade surplus. Island economy’s exit from the community bloc and the establishment of barriers in goods trading, even non-tariff ones (granting of zero customs duties was finally recorded during negotiations), will affect the trade balance of our country.
In 2019, for which final data are certified, the UK was the fifth partner of Romania in terms of exports (3.7% share of the total), after Germany (22.4%), Italy (11.3%), France (6.9%) and Hungary (4.8%), but ahead of Poland, Bulgaria (3.5% each), Turkey (3.2%), the Czech Republic and the Netherlands (3.1% each).
By imports, the United Kingdom ranked only 17th among the countries of origin of goods arrivals, with only 1.9%, somewhere between Kazakhstan (also 1.9%) and Greece (1.2%), very far from the top three with Germany (20.2%), Italy (9.1%) and Hungary (7%). That shows an unusual situation for us, who are used to having a deficit with most countries.
Data published by the INS since 2016 show that Romania relied on an increase in goods foreign trade with the United Kingdom of about one billion euros annually (see table below). Started even before the pandemic, the trade decline with the British has intensified sharply, so that our traditional surplus will be reduced to less than 60% of the usual one.
- The level of trade exchanges between Romania and the UK (million euro, 2016-2020)
It should be noted that it was, in fact, the most important in relation to a large EU economic power, as we can see from the comparison for 2019 with Germany (EUR -1,941 million), Italy (EUR -102.3 million) and France (EUR +517.1 million), the other major economies of the European continent.
The best year for us in bilateral trade was 2018, when, against the background of significantly higher growth of exports compared to the previous year (+ 12.2%), the imports lagged behind in terms of percentage advance (+3.2%), which placed the result to over EUR 1.1 billion more for us.
- Evolution of trade exchanges between Romania and the UK (%, 2016-2020)
If we make a structural analysis, we can see the share of exports with quite high added value, with about a third of the total in the „machines and appliances, electrical equipment” segment (EUR 855.2 million), followed by “transport means and materials” (EUR 511.1 million), with about a fifth of the total, almost exclusively by the export of cars (EUR 464 million euros) and textiles and articles thereof (an eighth, respectively EUR 323.1 million).
- Main goods exported by Romania to the UK (million euro, 2019)
- Of which
- Machinery, electrical equipment
- Transport means and materials
- Textile materials and articles thereof
- Various goods (mainly furniture)
- Optical, photo, medical instruments and apparatus
- Plastics, rubber and articles thereof
- Food products, beverages and tobacco
- Base metals and articles thereof
Therefore, United Kingdom’s exit from the single market can bring a significant loss for Romania, given the increased difficulty in materialising business opportunities and in free movement of people, at a time when we are in recent years on a quite clear upward trend (the relocation of multinational companies’ headquarters from the UK started already in 2019).
In this context, there remains for us to find ways to keep our trade surplus with the UK as high as possible, at a time when we are sinking below the 4% of GDP threshold in the current account level and trying to get back with the economy for the current year as close as possible to the level reached in 2019.