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Government misdescribes EU trade figures

by Jack Schickler | 12.04.2016

Could the UK strike a good trade deal quickly with the EU after leaving? Many Brexiteers argue we could – it would be in their interests, because they value access to our market. However, in the infamous pamphlet now winging its way towards 27 million homes, the government argues it may not be so straightforward. After all, the government says, “less than 8% of EU exports come to the UK while 44% of UK exports go to the EU”. Later on, it makes the first figure a more precise 7.8%.

The government is correct on the big point: cutting a trade deal post Brexit won’t be easy because we need the EU more than it needs us. But saying less than 8% of EU exports come to Britain isn’t quite right. If we treat the EU minus Britain as a single bloc, its exports to us account for 14.6% of its total exports.

This, however, excludes trade between other EU countries, such as France’s exports to Germany. If you include intra-EU exports, the statistic is 6.3%. But then the government should really describe that as the percentage of EU countries’ exports coming to the UK rather than as the percentage of EU exports coming to the UK. The reason why the government’s figure differs from 6.3% is not clear.

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Is it right to include intra-EU trade? In post-Brexit trade negotiations, legally, the EU would negotiate as a bloc, so that might seem to favour the 14.6% figure. But, in practice, trade agreements must be discussed and agreed by a sufficient number of member states in the EU’s council of ministers, so one cannot ignore national dynamics either. So that seems to favour the 6.3% figure.

In fact, neither figure is particularly useful. Looking at shares of exports can be misleading because different countries rely on trade to different degrees. What one really needs to look at is how much exports between the EU and the UK matter to each economy. On that basis, the UK’s exports to the EU are 13% of our GDP, while the EU’s exports to the UK are just 3% of its GDP.

The bottom line is that, whichever way you cut the figures, Britain is more dependent on exports to the EU than vice versa – and so will be more desperate to cut a deal post Brexit. Desperate negotiators don’t normally get good deals.

For full spreadsheet see here. Shortly after publication, a Number 10 spokesman told InFacts that he did “not accept the suggestion that this measure is misleading”. Separately, the body of this article was amended to clarify that the government’s figure does include intra-EU trade.

Edited by Hugo Dixon