Hope might be in sight for the UK: The Marshall-Lerner Condition and the J-Curve
The article about the UK’s unexpected widening of its trade gap has not realized the Marshall-Lerner condition. The formula for this condition is the PEDex + PEDimp (Price Elasticity of Demand) > 1.
The article states that although there was a devaluation of the pound, exports have remained at a measly 1% increase, while imports have increased by 5%. If exports in the UK were elastic, then a small devaluation of the pound would bring about a large increase in quantity of exports. Meanwhile the devaluation of the pound would decrease imports as the price of buying foreign currencies increases. In reality, however, the demand for imports may possibly be fairly inelastic, as a small devaluation of the pound has increased imports by 5%. On the other hand, the small devaluation of the pound has only increased the quantity of exports by 1%.
Be careful with terminology – exports aren’t elastic, but the demand for them is. Don’t forget to define your key terms so you can make the distinction between devaluation/depreciation etc. Good luck!