Value of goods imports

IBISWorld estimates that the value of goods imports will expand at a compound annual rate of 4% over the five years through 2024-25 to reach £841.1 billion. The total value of goods imports is the product of the volume of goods imported each year and the price of the imported goods. Demand for imports is primarily affected by domestic economic growth, the value of the pound and the price of imports. The effect of a change in import prices, commonly brought about by exchange rate movements, is determined by the price elasticity of imports i.e. the proportional change in demand as a result of a change in the relative price of imports. The UK mainly imports machinery and transport equipment, chemical products, mineral fuels and manufactured products.

Following Brexit, the sterling fell sharply against many major currencies, including the dollar and euro, inflating the cost of imported goods. Rising import prices combined with growing domestic demand contributed towards a rise of 12.4% in the value of goods imports in 2016-17. This trend continued into 2017-18, with Office for National Statistics stating that imports from both EU and Non-EU countries increased during the year. This can be partially attributed to the integration of the domestic economy with global supply chains, particularly for the automotive sector and transport equipment manufacturers. Therefore, the value of imports rose as UK-based producers were unable to adjust supply chains to reflect the increased costs.

In 2020-21, the pandemic reduced the level of imports to the UK. This was due to the factory shutdowns in China and parts of Asia causing a decline in imports from the region. In 2020-21, the total value of import fell by 13.1%. As the coronavirus spreading throughout the rest of the globe, particularly Europe and the United States, disrupting manufacturing sectors. Additionally, reduced economic activity in the United Kingdom, caused government social distancing measures has resulted in a decline in demand for imports. The closure of non-essential stores throughout the year reduced the volume of imports. In 2021-22, imports expanded by 23.4%, benefiting from all lockdown measures been eased. Imports expanded by 21.8% in 2022-23, driven by inflationary pressure. Imports are expected to fall in 2024-25 by 4% due to cost of living weighing on consumer spending and the pound strengthens.