Response to government leaflet, part 3: ‘8% of EU exports’

The Government claim (at page 8 of pdf) that less than 8% of EU exports come to the UK, whereas 44% of UK exports go to the EU. Is this true?

8%

The question has already been answered by Luke Wheeler at Pollstation. I have checked his data and calculations, and think I have found a mistake, although it doesn’t affect his main point too much. [The mistake is now corrected, since earlier this afternoon.]

Luke uses data from the European Commission’s DG Trade (Directorate-General for Trade) Statistical Guide 2016.

He assumes, reasonably enough, that ‘EU exports’ refers to goods and services exported outside the EU. This is in line with the EU’s own definition, according to at least two sources. In the DG Trade Guide 2016, ‘exports’ and ‘imports’ are defined explicitly as flows outward to or inward from non-member countries. Rather quaintly, but not I think without significance with regard to the eventual development of a single European state, flows within the EU are called ‘dispatches’ and ‘arrivals’:

outward flows

Again, in Eurostat’s Press Release, International trade in goods in 2015 (31 March 2016), a note to the table on page 2 states that:

EU exports refer to extra-EU exports only…

EU exports

Following Luke’s analysis, and adding the page references, we find on page 37 of the DG Trade Statistical Guide 2016 that EU exports of goods totalled €1702.0 bn in 2014, and on page 44 that exports of services totalled €764.9 bn, giving a total of €2466.9 bn.

The UK’s extra-EU exports of goods came to (page 59) €198.2 bn, and for services the amount was €171.8 bn, making a total of €370.0 bn.

Therefore, exports of the 27 (minus the UK) outside the 28 were 2466.9 – 370 = 2096.9 bn.

The next thing we need to know is EU-27 exports to the UK (which is the same as UK imports from the EU). Luke had me stumped for a bit, since he just says ‘we know the UK’s imports from the EU are £288 bn (€365 bn)’, without giving a reference. After a bit of searching I managed to confirm this from the Office of National Statistics here, and the link they give to a spreadsheet here. Sure enough the figure for 2014 was £288.265 bn, which is about €360 bn at today’s exchange rate. For simplicity, to compare with Luke’s work, I will make it €365 bn. It makes no real difference, of course, because what we really want is the data for, say, 2017-18, during the posited post-Brexit negotiations, so there is no point in aiming for a high degree of accuracy.

Now Luke takes this figure of €365 bn and divides by the EU-27 exports outside the 28 value of 2096.9 bn (for some reason he has 2098, but it makes little difference), and obtains:

365 ÷ 2097 = 17.4%.

However, it seems to me that in the post-Brexit situation, total EU-27 external exports should include their exports to the UK. So then we would have:

365 ÷ (2097 + 365) = 365 ÷ 2462 = 14.8%.

[As of a few minutes ago, Luke has now corrected this, and has 14.6%, which is near enough the same as mine.]

But this is still a lot more than the Government’s 8%.

What the Government did

Luke says that ‘Following some friendly dialogue on Twitter’, he has ascertained that the Government has included intra-EU trade in its total for ‘EU exports’. That is to say, the Government considers France’s exports (to use the normal term) to Germany (for example) to be an ‘EU export’. To me, that is definitely counter-intuitive and unnatural, and as I have shown above, is not how the EU itself defines its exports.

Luke gives a link to Eurostat for his total of €2932 bn for intra-EU trade in goods. Open up the nested tables until you see ‘EU28 trade by Member State…’, choose the first category ‘Intra-EU28 trade…’, and then click on the symbol for ‘Tables, Graphs and Maps interface’. On the table that pops up, it gives different ways of displaying the data, and you need to choose ‘Exports in million of ECU/EURO’. And there is the figure of 2,932,271 million euro. It says ‘total product’. One talks about ‘products and services’, so I think it is fairly safe to assume that Luke is right in saying that this corresponds to trade in goods.

Again, for services, Luke gives a link to an OECD table. Choose ‘European Union (28 countries)’ for ‘Country’ at the top of the table, and euros for the currency, and then scroll all the way down to the bottom, and you will find ‘European Union (28 countries)’ on the left. And sure enough, the figure for 2014 is 920,272.10 million euro, corresponding to Luke’s €920 bn.

So intra-EU28 exports total 2932 + 920 = 3852

Extra-EU28 exports total 2467 (as above)

So total intra- and extra- EU28 exports come to 2467 + 3852 = 6319. This is also Luke’s figure.

To get intra- and extra- EU27 exports, we need to subtract intra-EU and extra-EU UK exports. From the ONS spreadsheet referenced above, we find figures of 226.687 for Exports to the EU and 281.036 for exports outside the EU, giving a total of about £508 bn, or €634 bn, at today’s exchange rate

So then we get:

EU27 exports (intra- and extra-) = 6319 – 634 = 5685. Luke gives a value of €5692 bn, which is close enough. Maybe it is again an exchange rate difference, but it seems to be in the opposite direction to the previous small difference in figures above. No matter, I will take his figure for simplicity’s sake.

This time we don’t need to add on EU exports to the UK as they have already been counted as intra-EU 28 exports.

So finally, EU27 exports to the UK as a proportion of total intra- and extra EU27 exports is:

365 ÷ 5692 = 6.4%

which is even lower than the Government’s figure of ‘less than 8%’, or 7.8% in the footnote to the web version of the leaflet here. I don’t think Luke has discovered why their figure is so high, and I feel no desire to find out, since their methodology is misleading in the first place, in my opinion.

Conclusion

The Government’s figure of 7.8% for EU27 exports to the UK as a proportion of their total exports is based on a definition of ‘EU exports’ which is counter-intuitive and contrary to the EU’s own definition of their exports. They should at the very least have made clear what definition they were using. But if they were trying to give the facts in a fair and balanced way, I think they would have done better to define ‘EU exports’ as EU exports outside the EU.

Andrew

 

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