So large and persistent is Britain’s trade deficit that it’s tempting to believe that the country essentially makes nothing; that it merely sucks in everything from abroad (largely China) and produces nothing of value itself. That is, as I’ve tried to explain in previous posts, a misunderstanding. A brief look at the trade figures from the Office for National Statistics, the latest of which were released this morning, underlines why. It’s not merely that the deficit is shrinking (which it is), it’s that Britain was never really all that much of an export basket case in the first place.
Here’s a pie chart of Britain’s biggest exports for last year.
As you can see it’s dominated by mechanical machinery, electrical machinery and medicines and drugs. But there are other key elements there – works of art, of which Britain exported £4.7bn worth of last year, precious stones (£5.7bn) and beverages (£6.9bn). Quietly, efficiently and below the radar, British companies are manufacturing an extraordinary number and variety of different goods which are sent around the world.
But there’s a catch: the chart above merely measures exports. It doesn’t take account of what Britain imports in return. If, say, we send out 5 cars a day but suck in 10 cars a day, that means our comparative balance of payments is in negative territory for cars. This doesn’t mean the car industry isn’t thriving, but it means the UK has to rely on other countries to fulfil its demands for cars (the reality, of course, is that even if Britain had a balance, it would still need to trade – after all, the kinds of cars we make aren’t necessarily the ones we want to drive ourselves).
Anyway, here’s the pie chart of what we import from overseas.
As you can see, the numbers in the pie segments above tend to be slightly bigger than those in the chart of UK exports: that reflects the fact that the UK has a considerable deficit in its trade in goods (running at £8.2bn in April). However, this overall deficit disguises the fact that in certain areas Britain is comfortably a net exporter. Frustratingly the ONS doesn’t produce an easy chart of what those kinds of goods are, so you’ll be pleased to hear I’ve run them through the spreadsheet, comparing the top 20 exports with their respective imports, and working out the balance for each. So without further ado, here are Britain’s biggest netexports (and how much more, in £m, Britain exports of them than it imports):
|Medicinal & pharmaceutical products
|Fertilisers & other chemicals
|Toilet & cleansing preparations
|Scientific & photographic
|Works of art
And here is the list of the items Britain has the biggest net deficit in (and how much more in £m it sucks in of them than it exports). The biggest deficit is at the top:
|Other miscellaneous manufactures
|Road vehicles other than cars
|Miscellaneous metal manufactures
|Non-ferrous metals excl. silver
|Iron & steel
As you can see, Britain actually had a slight deficit in our trade of cars, though it was in positive territory for a few months, which marked the first time Britain was a net exporter of cars since 1976.
Now, granted, this chart doesn’t include services exports which (thanks in large part to financial services) boost Britain’s overall trade picture. But it is a reminder that there are plenty of areas in which the UK remains an international champion – whether that’s in the production of mechanical machinery, pharmaceuticals, planes, drinks and toilet preparations.