The publication of the Office for National Statistics’ (ONS) Pink Book last week, detailing the UK’s balance of payments, allows us to see which countries the UK traded with in 2017.
Here we examine the UK’s trade during 2017 in light of recent historical trends, as well as its geographical pattern.
A narrowing of the trade deficit
In 2017, the UK exported £615.9 billion of goods and services and imported £641.8 billion, resulting in a trade deficit of -£25.9 billion. This represents a narrowing of the UK’s trade deficit from -1.6% of GDP in 2016 to -1.3% in 2017 and is the UK’s lowest trade deficit to GDP ratio since 2011.
This deficit is primarily due to a widening of the trade surplus in services (meaning the value of exports exceeded the value of imports). Service exports increased from £257.9 billion in 2016 to £277 billion in 2017, with the trade in services surplus growing from 5.2% of GDP in 2016 to a record high of 5.5% of GDP in 2017.
By contrast, the trade deficit in goods increased. While goods exports increased from £299.1 billion in 2016 to £338.9 billion in 2017, goods imports grew at a faster rate, meaning the trade in goods deficit increased from -£132.7 billion to a record high of -£137.4 billion, though remained unchanged at -6.7% of GDP.
The UK has recorded a trade deficit in its combined trade in goods and services every year since 1998. However, it has recorded a trade surplus –18 times since 1948, and the longest sustained period was the nine years between 1977 and 1985. The remaining nine were recorded between 1956-58, 1969-71 and 1995-97.
There has been a trade surplus in services every year since 1966 and in all but five years since 1948, though a deficit in goods every year since 1981.
Geographical pattern of UK trade
Taken as a bloc, the EU was UK’s largest trading partner in 2017, accounting for 44% of UK exports of goods and services and 53% of UK imports.
While the UK recorded a trade deficit with the EU in 2017, this narrowed from -£74.6 billion in 2016 to -£67 billion in 2017, with the value of UK exports to the EU growing at a faster rate than imports from the EU.
The graph below shows UK trade with each of the other 27 EU member states in 2017. The UK had a trade deficit with 17 of these countries, a surplus with four and was broadly in balance with five. The UK’s largest EU trade surplus was with Ireland (£12 billion) while its largest deficit was with Germany (£21 billion).
By contrast, the UK had a trade surplus with non-EU countries of £42.9 billion – a deficit in goods of -£42.4 billion was more than offset by a surplus in services of £83.5 billion. While the UK’s trade surplus with non-EU countries fell slightly from 2016, it has now recorded a trade surplus with non-EU countries every year since 2010.
The UK has now exported a greater proportion of its total goods and service exports to non-EU countries every year since 2008, but continues to source a greater proportion of imports from the EU than from non-EU countries.
Trade with individual countries
Looking at individual countries, the USA was the UK’s largest trading partner in 2017. It exported £112 billion of goods and services to the US, 18% of all UK exports. Germany was the second largest export market, though UK exports to Germany were around half those to the USA. Seven of the UK’s top 10 export markets in 2017 were EU member states – the remaining three were the USA, China and Switzerland.
Germany was the UK’s largest source of imports in 2017, totalling £78 billion, 12% of all UK imports. The USA was the second largest source of imports at £70 billion (11% of all imports) and the Netherlands third at £47 billion (7% of all imports).
Similar to exports, seven of the UK’s top 10 import markets were in the EU in 2017 – the remaining three were the USA, China and Switzerland.
Matthew Ward is an Enquiry Executive specialising in regional development and trade statistics at the House of Commons Library.