Over the last decade, the UK has consistently run a deficit on its balance of trade in goods, partially offset by a surplus in services. Some economists argue that the persistence of this deficit reflects a fundamental lack of international competitiveness, driven by weak productivity growth and underinvestment in physical and human capital. Extract D (lines 12–14) states: "addressing the deep-seated structural weaknesses of the domestic economy is essential if the nation is to close its persistent trade gap with major trading partners."
Using the extract and your knowledge of economics, assess the policies that could be used to reduce the UK's balance of trade deficit.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.