The UK’s evolving export landscape
With the up and coming referendum on whether the UK should remain part of the EU. Much has been made (on both sides of the argument) of just how important the EU is as a trading partner to the UK. While the EU makes up the single largest trading partner with the UK by some margin, it is worth noting that the percentage of goods that the UK exports to the EU appears to be dwindling. Indeed, since the 2000’s the proportion of UK goods heading to our continental neighbours has decreased. Many analysts would point to the fact that this is the direct result of a more concerted effort being made to target the higher growth regions, and address the UK’s unfavourable trade deficit. Many others would point to the fact that Europe's economy, appears to be stagnant, overburdened by bureaucracy, a seemingly unending Euro-crisis, and a lack of political will (or competence) to address the the major reforms that are so desperately needed.
British businesses are now exporting more goods to outside the EU than ever before, and this encouraging development looks set to continue. The UK now exports more to China than Belgium and Luxembourg with exports growing by 12% in 2014 to £13.9bn. In addition exports to Hong kong have increased 11% to £6.3bn, which means that we now export more to China and Hong Kong combined that France and Ireland respectively.
The research also indicates that the UK is continuing to perform very well with some of those fast developing markets, including £6.1bn worth of exports to the United Arab Emirates, £5.6bn to South Korea and £4.6bn to India. India in particular appears to be firmly on the British governments trading radar, with around 9 billion pounds in commercial deals being signed by Indian Prime minister Narenda Modi on hist most recent visit to the UK. It should be noted as well, that its not just those rapidly emerging economic powerhouses that have proved key to the UK’s stronger export figures. Four new markets entered the UK’s top 50 export list last year, Angola (£808m), Azerbaijan (£602m) and Macedonia (£518m).
One of the key developments in the UK’s increasingly impressive trading statistics, is the dramatic rise in its export of services, which are very close to overtaking those of its manufactured goods. While Britain’s status as the worlds biggest exporter of manufactured goods appear to be resigned to the history books, its service industry appears to have emerged a more durable source of competitive advantage in the global economy. While our significant service trade surplus is not yet emphatic enough to counter the shortfall in manufactured goods that has left the country with a trade deficit since 1998, it is a source of significant encouragement. In 2014 alone British service exports very nearly equaled the value of its manufactured exports, and within three to five years they are expected to overtake them. This is quite a unique state of affairs, given that for the richer developed countries, manufacturing tends to make up the overwhelming bulk of exports. This in no small part can be attributed to the UK’s and particularly the city of London’s global influence which dates back centuries. The UK’s legal and educational systems, combined of course, with the English language, facilitated Britain's cultural influence extending far and wide across the globe. We must also accept however, that it is a further reflection of just how much further along the path of deindustrialisation the UK, as with many other advanced economies, is.