Export Position Paper

EXPORT OF SERVICES POSITION PAPER – 8.7.20

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. 

Exporter
(Ranked by value)
Value
(Billion US$)
Share in world total
(%)
Annual growth rate
(%)
United States of America828.414.23.9
United Kingdom376.26.45.5
Germany331.25.77.7
France291.55.05.9
China266.84.617.0
3969.767.96.8

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

Trade in Services – Seasonally Adjusted £m

EXPORTS

2018 2019
Manufacturing and maintenance services 5691 6443
Transport 29469 30929
Travel 36431 39122
Construction 2671 2943
Insurance and pension services 19425 20114
Financial 63222 62916
Intellectual property 19721 19801
Telecommunication, computer and information services 23960 23288
Other business Services 98796 112584
Personal, cultural and recreational services 4584 4478
Government 2900 3536
Total 306870 326154

IMPORTS

2018 2019
Manufacturing and maintenance services 2151 2797
Transport 25524 25680
Travel 51742 55727
Construction 2090 2821
Insurance and pension services 3095 3120
Financial 17017 19552
Intellectual property 10860 13269
Telecommunication, computer and information services 10751 10458
Other business Services 66285 80871
Personal, cultural and recreational services 4095 4430
Government 3682 3605
Total 197292 222330

SURPLUS / DEFICITS

2018 2019
Manufacturing and maintenance services 3540 3646
Transport 3945 5249
Travel -15311 -16605
Construction 581 122
Insurance and pension services 16330 16994
Financial 46205 43364
Intellectual property 8861 6532
Telecommunication, computer and information services 13209 12830
Other business Services 32511 31713
Personal, cultural and recreational services 489 48
Government -782 -69
Total 109578 103824

£
Billion
% of UK total
1, Other business services: 112.6 34.5%
2, Financial services 62.9 19.3%
3, Travel services 39.1 12.0%
4, Transportation services 30.9 9.5%
5, Telecommunications, computer and information services 23.3 7.1%
6, Insurance and pensions services 20.1 6.2%
7, Intellectual property 19.8 6.1%
8, Personal, cultural and recreational services 4.5 1.4%
9, Maintenance and repair 3.9 1.2%
10, Government services 3.5 1.1%
11, Construction services 2.9 0.9%
12, Manufacturing services 2.6 0.8%
Total £326.1bn

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

Country Exports Imports Total Rank
United States inc Puerto Rico 80.2 45.1 125.3 1
France 18.2 16.9 35.0 2
Germany 21.7 13.1 34.8 3
Ireland 16.6 10.8 27.4 4
Netherlands 18.2 8.8 27.0 5
Spain 8.5 17.0 25.5 6
Switzerland 13.0 5.7 18.7 7
Italy 11.3 77.1 18.4 8
Japan 8.0 6.5 14.5 9
Sweden 5.6 6.0 11.5 10

Services Exports Only

Country Exports Rank
United States inc Puerto Rico 80.2 1
Germany 21.7 2
Netherlands 18.2 3
France 18.2 4
Ireland 16.6 5
Switzerland 13.0 6
Italy 11.3 7
Spain 8.5 8
Japan 8.0 9
Australia 7.0 10

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.
Important Note

This Position Paper has been prepared by Devonshire House Network Ltd, who created, developed and promoted this Event in order to better inform those attending this online Panel Discussion – or thinking of attending it – or becoming involved subsequently.  Exporting Services, and related matters, is a highly complex area with statistics and information coming from many sources and, whilst Devonshire House has taken care over its accuracy and meaning , you must always take formal advice before taking any action that might have originated from this online Event, in whatever form this might take.  In particular, different figures from different sources are updated at different times.

However uncertain or difficult the coming months may be, many Business Leaders are or will be taking the view that selling services to foreigners or – better still – selling more services to more foreigners  – needs to be part of their Business Plans.  8.7.20 presents a great opportunity for you to fully explore this potential.  BDO, the Institute of Export and International Development and the DIT look forward to supporting you in your endeavours, should you so require of them.

Charles Russam, Managing Director – Devonshire House Network Ltd.

charles.russam@DevonshireHouseNetwork.co.uk.       O8081 565604 – 07785 297059. Devonshire House Network Ltd is a company registered in England and Wales. Registered number: 8477779. 73 High Street, Newport Pagnell, Bucks. MK16 8AB. Registered Office: 45 Pall Mall, London.  SW1Y 5JG. www.DevonshireHouseNetwork.co.uk.

 

Devonshire House is a people-focused membership club for Director-level professionals in leadership roles who have an instinctive focus on the human side of enterprise.  Our purpose is to create, for our members, thinking time and space for key business issues and where people make the difference. Why not become a Member of Devonshire House?