It’s that time of the month again that the Office of National Statistics (ONS) publishes their monthly trade figures. The February 6th figures are of extra interest as for the first time in a year we not only have the last available month’s UK trade figures but also Q4 2015 and in fact the entire year ending 31 Dec 1915. This allows us to check some of the more dubious ukip and other eurosceptics’ claims about how green the grass will be outside the EU if they had their brexit way.
Predictably #ukip‘s in house economic ‘expert’ Ruth Lea wasted no time in cutting and pasting her usual #brexit non sequitur on Twitter, just by amending last month’s trade deficit with the EU with this month’s updated figure and ending in her usual “They’ll trade” mantra’ “because they have so much more to lose:
The sobering truth of course is that the UK’s goods trade deficit with non-EU countries was also heavily in the red. I quote from the ONS summary: ” the deficit with non-EU countries  £36.0 billion”! Almost in Cameron style (when he’s talking about reducing the UK’s national debt) ONS hasten to add that this particular deficit is narrowing, but at the current rate it would take till 2020 till this much vaunted ROW trade actually starts having a positive effect on the UK’s balance of payments. Thanks @ for that observation. Until that date it is the ‘services sector’ and what is euphemistically called Direct Foreign Investment (FDI) that has to make up for Britain’s trade fiascos. By the way, FDI is also on te wane according to this ONS report and the so called balance of payments in dire straits.
Why is this bit of economic news relevant to the brexit debate? Because the most fervent brexit tweeters selectively quote from every ONS bulletin to suggest to undecided voters in the up and coming EU referendum that the grass will be so much greener outside of the EU, when in fact we’d be moving out of the EU rain just to take cover in some creaking ROW shelter with a leaking roof.
I have of course always maintained that to solve Britain’s pernicious trade deficit, far from seeking a brexit, we should try exporting a little bit more and importing a whole lot less. In other words far from blaming the EU, eurosceptics should abandon their addiction buying expensive German cars and perhaps buy more UK quality cars. I quote another line from ONS, this time from their economic review 2015 report:
“The trade deficit has been broadly flat since 2011, but within this the deficit with the EU has deteriorated while that with non-EU trade partners has improved. These divergent trends are largely driven by trade with Germany and with the US respectively.”
What does this statement mean if it’s translated to actual things being traded. I refer back to the first report:
“Germany remained the UK’s top import partner in 2015 with imports of £62.2 billion, increasing by £1.3 billion compared with £60.8 billion in 2014. Anecdotal evidence suggests this increase was due to the import of cars and miscellaneous manufactures. “
A closer look at the much vaunted thriving non-EU exports also renders some interesting insights.
“The USA remained the UK’s top export partner in 2015 with exports of £47.5 billion, increasing by £10.1 billion compared with £37.4 billion in 2014. Anecdotal evidence suggests this increase was due to the export of chemicals, cars, whiskey, oil and paintings.”
Now let’s look at the right hand side of this ONS graph and see what’s really going on here:
What this graph tells us is that when Kippers and assorted Eurosceptics tell us that trade outside of the EU is doing so great they really are only talking about exports to the USA. Even that is flat-lining! Take away the special relationship UK has with the Yanks, trade with the non-EU rest of the world is also loss making, certainly with China, India and Norway (oil). It would be interesting to look at a further breakdown of the grey area represented by ‘Rest of the non-EU’. Almost certainly we will see that exports to Switzerland make up a large part of this ‘other’surplus and my guess is that these aren’t exports in the normal sense of the world, but rather more evidence of ‘Selling the UK family silver’. This is a Cameron Osborne sleight of hand I have blogged about here.
“Between 2014 and 2015 exports of goods to countries outside the EU increased by £3.5 billion, chemicals was up £6.1 billion and miscellaneous manufactures increased by £2.6 billion; specifically works of art which saw an increase of £1.3 billion and jewellery of £0.8 billion. “
The funny thing of course is, that the UK-USA trade, which is so profitable from a UK perspective, is with another economy, which just as the EU ( if you believe poor Dan Hannan) is in ‘terminal decline’. This #brexit lot would want the UK to jump ship from one ‘rotten corpse’ to another?