3 months ago


Wyelands Bank - Growing together FIGURE 1 Trade openness in the G20 – imports and exports as a percentage of GDP Trade openness: total trade as % GDP 90 80 70 60 50 40 30 1. DRIVING THE UK ECONOMY The UK economy is highly dependent on trade and its importance cannot be overstated. Trade accounts for 58 per cent of UK GDP. This makes the UK one of the most open economies in the G20. It is more open than China, the US or Japan (figure 1). In 2016 the UK exported goods worth US$433.5bn and imported goods worth US$678.1bn. Exports are key to closing the UK’s trade deficit and to fuelling growth. Over the course of 2017, the government reported more than an 11 per cent growth in exports. 20 10 0 Brazil Argentina USA Japan China Indonesia Australia India Russia Turkey Italy UK France Saudi Arabia South Africa Canada Mexico South Korea Germany Source: IMF, 2017 FIGURE 2 Regional share of UK trade, 2016 South America 1.2% Mena 1.8% Other 21.2% Regional Growth Europe is currently the UK’s biggest trading partner for exports (figure 2). Looking further afield, exports to Asia are projected to grow the fastest at over 3 per cent annually for the next five years. South America is another region where the UK’s exports are forecast to grow well – by around 0.5 per cent annually over the next five years. Many commentators now point to the importance of trading with our Commonwealth partners. The drop in commodity prices has meant that trade with these nations has reduced substantially over the past five years. However, we are expecting growth in imports of around 1 per cent annually to 2021 from these countries. We also expect exports to recover to their pre-2015 levels to a value of US$35bn by 2021 or around 4.5 per cent of all UK exports. Sub-Saharan Africa 5.4% Asia Pacific 7% North America 17.2% EU 46.3% Source: Coriolis Technologies 4 | UK trade briefing 2018 In collaboration with GTR

Wyelands Bank - Growing together FIGURE 3 UK trade in services in 2016 (imports and exports, US$bn) Value of trade (US$bn) 120 100 80 60 40 20 0 Business services Imports Financial services Travel Transport Exports Insurance and pension services Telecoms and IT Intellectual property charges Maintenance and repair services Personal, cultural and recreational Government goods and services Construction Manufacturing as service Sectors and services Cars, aerospace, pharmaceuticals and electronics dominate trade with our major export partners. The future looks positive for all these. We expect exports of automotives, aerospace and pharmaceuticals to the US and Germany in particular to dominate growth. The picture of UK trade wouldn’t be complete without also looking at services – equally vital to our economy. Service sector exports were worth US$332bn in 2016 – or 43 per cent of the UK’s total exports. The UK has a trade surplus in services, meaning we export more than we import. This is driven by financial services and business and professional services in particular (figure 3). Export growth in services will be led by highly innovative sectors in the UK including: •Manufacturing as a service, repair and maintenance, and financial services, which are forecast to grow by over 3 per cent annually to 2021 •Business services and intellectual property services are forecast to grow by 1 per cent annually to 2021 Looking at sub-sectors within service industries, we see R&D, business travel and personal travel have made a real impact on export growth over the last five years. In addition, while momentum is slowing, growth is still faster across these areas than in any other sub-sectors to 2021 (figure 4). Rising demand to fly to China over the next five years may well explain the boost to business and personal travel. Travel features strongly in service sector trade with all of our key partners, as we will see in more detail from the regional picture in the next section. FIGURE 4 Annual percentage growth in sub-sector services 2011-2016 and 2017-2021 25 20 15 22.0 10 5 1.3 2.4 2.1 10.8 18.4 8.5 5.1 4.1 4.7 1 NB – the data in the GTR+ UK report and this executive summary for services are given for exports only. This is because the mirroring process used in the Coriolis dataset reduces the size of the UK surplus considerably. Coriolis’s approach is consistent with the latest ONS statement on service-sector statistics (Chris Giles: “Data Errors undermine UK’s Emphasis on Services says ONS.” Financial Times, 0 Personal & educational travel Air transport (excl passenger & freight) R&D services Professional & management consultancy Legal, accounting & PR However, for the purposes here, we have simply looked at exports in order to avoid any controversy. Coriolis is an economic data company. 2011-2016 2017-2021 Source: Coriolis Technologies 5 | UK trade briefing 2018 In collaboration with GTR

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