Export Position Paper

The UK is the second biggest exporter in the world – of services. How can we exploit this in the new world order?

This online Panel Discussion – organised by Devonshire House and collaborating with The Institute of Export and International Trade and with BDO on 8.7.20 – is aimed at discovering what this statement means and where the opportunities lie in the hugely uncertain business world now unfolding.  This Position Paper offers additional information to those seeking a more in-depth understanding – primarily senior executives who ought to be exporting or exporting more.  There is also an element of celebration about this – something at which the UK is genuinely good at in world terms – and needs to capitalise on it.

Headline Figures.

The UK is the second biggest exporter of services in the world.  In 2019, the UK exported £326bn in services (with a surplus of £104bn) and £372bn in goods (with a deficit of £130bn.)  A net deficit seems to be the norm.

These are current figures from UNCTAD for services exports of the Top Five exporting (Developed) Nations in the world in 2018. 

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Source: https://stats.unctad.org/handbook/Services/Total.html

Trade in Services – Seasonally Adjusted £m

EXPORTS

IMPORTS

SURPLUS / DEFICITS

Source – xls (348.0 KB)

https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/datasets/balanceofpaymentsstatisticalbulletintables

Exported Services Breakdown – Ranked in size

The services sector is the biggest part of the UK economy, equivalent to approximately to 80% of GDP in 2020 and employing over 26 million people in the period January to March 2020 (approximately 81% of total employment).  Leaving the EU has created the freedom to pursue an independent trade policy that reflects our particular strengths in services and is focused on areas of competitive advantage.

Services accounted for around one-third of the value-added of UK manufacturing exports in 2015 and taking into account the value-added of services used as inputs to goods exports, they account an estimated two-thirds of UK exports⁷. 

Supporting information:

Other Business Services:                                                                                                    £112.6bn (34.5% of UK total)

• 37% of this figure consists of Legal, Accounting, Management Consultancy, and Public Relations services. The rest are:-
• Other business services not included elsewhere.
• Advertising, Market Research, and Public Opinion polling.
• Architectural, Engineering, Scientific, and other technical services.
• Work undertaken on a systematic basis to increase the stock of knowledge. (Trade Related Services)
• Other Research and Development Services.
• Waste treatment and de-pollution.
• Agricultural and mini g services. (Operating Leasing Services)

Financial Services:  (SIC Codes 64 and 66)                                                            £62.9bn (19.3%) 

Countries to which the UK exports services to and Imports from – 2019.

Total Services Trade – £billions

Services Exports Only

Supplementary information can be found at:-

UK Trade in Numbers – Feb 2020  –  As overall context, this is the latest available comprehensive summary of global trade – Goods and services from the UK’s Department for International Trade.  The DIT has overall responsibility for promoting UK trade across the world and attracting foreign investment to our economy. The DIT is a specialised government body with responsibility for negotiating international trade policy, supporting business, as well as delivering an outward looking trade diplomacy strategy. Some figures have been changed since publication but remain a good visual of UK trade and investment statistics.

International exports of services from subnational areas of the UK: 2017 – London contributed over 40% of service exports in 2017. For most regions (except for Northern Ireland) exports to the rest of the world were estimated to be somewhat higher than exports to the EU. Financial and insurance services formed the biggest industry exporting services for 10 of the 12 NUTS1 regions in the UK.

Kim Hayward is a Partner at BDO and is the UK firm’s International Liaison Partner managing, on behalf of the UK firm, relationships with the other 140 BDO member firms around the world and looking after major cross-border clients and prospective clients and Global relationships. He also represents the UK on BDOs’ European Board looking at strategic and operational issues and opportunities across Europe. These roles take him to China, India, Russia, the USA and many of the European countries. Kim chairs BDO’s Europe China Desk which advises businesses working, or seeking to work, cross-border and supporting our clients M&A activities. In the UK he oversees their India and China Advisory Services teams.

Kim sees the human interactivity element in export development as vital.  “More recently, knowledge is also coming through data that can be gathered remotely, and service organisations, working with the data and intelligent algorithms, can deliver hugely valuable projects very easily from a modest business infrastructure in the UK. Does this represent an enormous opportunity for the UK service sector? If it does, are we doing enough to promote, encourage and support it?”

Read more about this HERE.

Marco Forgione  is Director General of the Institute of Export and International Trade. He started his career as parliamentary assistant to the then Shadow Minister of Environment and Urban Affairs which included being appointed as the Secretary to the Enquiry into Urban Policy, City 2020. This was followed by a Director roles with the Landscape Institute, the Royal Chartered Institute for Landscape Designers and in Education.  In 2008 Marco was appointed as CEO at the International Visual Communication Association, where he established the Association as a key partner with UK Trade & Investment, leading trade missions to UAE, Qatar, China, Germany and India.  The Institute of Export & International Trade’s mission is to enhance the export performance of the United Kingdom by setting and maintaining professional standards in international trade management and export practice. This is principally achieved by the provision of education, training and practical business support services. More info from www.export.org.uk

Susan Caldwell is Director, Financial & Professional Services, Department for International Trade (DIT). Susan is responsible for leading UK Government’s trade and investment support to the Financial and Professional Services sector. For any further information, please visit www.great.gov.uk.  Their market guides can help you find export opportunities and prepare to do business in new markets.

Frequently asked questions by organisations looking to export services. 

We won’t be able to cover all these at our Panel Discussion on 8.7.20 – but would be keen to point to relevant source contacts when asked.

• How can I gather more information about Exporting of Services – from Government, Public or Private sources?
• How can I find out if the sector we fall in has exporting potential?
• Where do the Experts see the growth coming from? What trade sectors feature in exports much less that they ought to?
• How can we find out who we might be able to collaborate with in certain markets?
• What are the operational differences between UK businesses that have overseas subsidiaries, or branches or same-brand firms – in terms of work or business opportunities?
• Given the number of large UK companies actively involved in exporting, how can we find out if there are subcontract, partnering or associate opportunities with established UK players in overseas markets?
• Are there any relevant self-help groups based in the UK?
• What can I expect from Banks?
• How useful are foreign embassies?
• Has Bribery legislation – UK and overseas – and its various interpretations and implications – damaged UK export effectiveness?
• What inroads have online businesses made in recent times?  Where are the opportunities here?
• This is not a Brexit question – but what changes are we likely to see as we disengage further from the EU?
• Other matters may include:-  Documentation, Export controls, Customs & VAT Procedures, Regulatory and compliance issues, Insurance issues, Payment terms, Transport & logistics. Local cultures.