Tag: #trade

ICAEW chart of the week: Overseas travel

My chart this week is about visits abroad by UK residents, illustrating how people have started to travel again following restrictions during the pandemic.

Column chart showing number of foreign trips by UK residents by calendar quarter. 2017: 15.9m, 23.7m, 28.7m. 18.9m 2018: 16.6m, 24.6m, 29.9m, 19.4m 2019: 18.2m, 25/8m, 30.0m, 19.2m 2020: 13.9m, 0.9m, 6/2m, 2.8m 2021: 0.9, 1.2m, 8.1m, 9.0m 2022: 9.4m, 20.4m

Visits abroad by UK residents have picked up following the depths of the pandemic but have yet to recover to pre-pandemic levels.

According to the Office for National Statistics, the number of visits abroad by UK residents by quarter amounted to 15.9m, 23.7m, 28.7 and 18.9m in 2017; 16.6m, 24.6m, 29.9m and 19.4m in 2018; 18.2m, 25.8m, 30.0m and 19.2m in 2019; 13.9m, 0.9m, 6.2m and 2.8m in 2020; 0.9m, 1.2m, 8.1m and 9.0m in 2021; and 9.4m and 20.4m in the first two quarters of 2022.

Although substantially higher than at the height of COVID-19 travel restrictions, trips abroad during the first half of 2022 were still substantially lower than before the pandemic. 

The 20.4m visits during the second quarter of 2022 comprised 15.1m to countries in the European Union, 1.3m to other European countries, 1.0m to North America and 3.0m to other countries around the world. Of these trips, 13.4m were for holidays, 5.1m were to visit friends or relatives, 1.4m for business and 0.5m were for other reasons. 

These numbers compare with 25.8m visits in the second quarter of 2019, comprising 18.9m to the EU, 1.4m to other European countries, 1.6m to North America and 3.9m to the rest of the world. This comprised an estimated 16.8m holidays, 6.0m visits to friends or relatives, 2.5m business trips and 0.5m other.

The amount spent by travellers in the second quarter of 2022 was estimated to be £15.8bn, an average of approximately £775 per visit. This compares with an average of around £630 in the second quarter of 2019, reflecting a weaker pound, inflation and the mix of travellers and countries visited.

Trips abroad during the key summer quarter of July to September 2022 has yet to be released by the ONS, so we wait to see whether there will be anywhere near the peak of 30.0m visits recorded in Q3 of 2019.

This chart was originally published by ICAEW.

ICAEW chart of the week: UK international trade

As 2021 draws to a close, our chart this week looks back on a rocky couple of years for UK international trade which has endured Brexit complications and the global COVID-19 pandemic.

A column chart showing monthly exports (in orange) and imports (in purple) stacked on top of each other, going from October 2014 to October 2021. The y-axis goes from £0bn to just over £120bn. Total exports + imports increased from £92bn in October 2014 to a peak of £123bn in March 2019, fell £113bn the following month before peaking again at £122bn in October 2019. Trade fell to a low of £86bn in May 2020, recovered to £111bn in December 2020, fell to £93bn in January 2020 and grew to £104bn in July 2021 with similar monthly totals in September and October 2021.

Our chart of the week illustrates how Brexit and COVID-19 have combined to create a rocky couple of years for UK exports and imports of goods and services, reflecting the trials and tribulations of the Brexit process as well as the impact of the coronavirus pandemic on trade since the first lockdown last year.

The monthly trade total (exports + imports) increased from £92bn (£45bn + £47bn) in October 2014 to a peak of £123bn (£57bn + £65bn) in March 2019 at the height of Brexit ‘no deal’ preparations before falling back to £113bn (£54bn + £59bn) the following month before peaking again at £122bn (£61bn + £62bn) in October 2020 ahead of the end of the transition period. Following the introduction of new trading arrangements and the run-down of inventories, trade fell to a low of £86bn (£47bn + £39bn) in May 2020 during the first lockdown before recovering to £111bn (£52bn + £59bn) in December 2020. Trade fell back to £93bn (£45bn + £48bn) in January 2020 before growing back to £104bn (£51bn + £53bn) in July 2021 where it has appeared to stabilise with similar monthly totals in September and October 2021.

The chart provides only a hint of the challenges that have faced both importers and exporters over the past couple of years as they have had to navigate new trading arrangements with our European neighbours just as the pandemic has caused massive disruption across the planet. Imports and exports to EU countries have both fallen, but the EU still remains the UK’s principal trading partner, comprising almost half of the UK’s trade in goods for example.

The stabilisation in trade flows in the last few months for which statistics are available may be a hopeful sign, but with greater customs checks on the imports of goods from the UK coming into force in January, and the continuing evolution of the pandemic, the position is still very uncertain.

This is our last chart of the week for 2021 and so we would like to take this opportunity to wish you all the best for a safe and enjoyable Christmas break and for a healthy and prosperous 2022. We look forward to seeing you again in the new year.

This chart was originally published by ICAEW.

ICAEW chart of the week: CP Trans-Pacific Partnership

12 February 2021: The UK wrote to New Zealand at the start of this month formally requesting permission to apply for membership of the Comprehensive and Progressive Trans-Pacific Partnership. What is the CPTPP and what opportunities would joining provide to the UK?

The #icaewchartoftheweek is on the UK’s application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a group of eleven countries on the other side of the world. This trade organisation was established to improve trade links between countries surrounding the Pacific, reducing trade barriers between the countries involved and aligning regulations in areas such as intellectual property. 

It is sometimes described as the third largest free-trade area in the world, after the US-Mexico-Canada Free Trade Agreement (USMCA, formerly NAFTA) and the EU-EEA-Switzerland Common Market, but it is important to understand that it is much less integrated than a customs union (with shared tariffs), a common market (with fuller regulatory alignment) or an economic union (such as the highly integrated EU Single Market with unified standards and regulations). 

According to IMF forecasts for 2021, Japan is the largest economy in the CPTPP with GDP of £3,815bn, while Brunei is the smallest with GDP of £9bn. The other members are Canada (£1,335bn), Australia (£1,125bn), Mexico (£890bn), Malaysia (£280bn), Vietnam (£275bn), Singapore (£270bn), Chile (£220bn), New Zealand (£165bn) and Peru (£150bn). This compares with a forecast of £2,180bn for UK GDP in 2021.

Membership is not exclusive, with CPTPP members involved in a number of other multilateral free trade agreements. Canada and Mexico are also members of USMCA. Malaysia, Singapore, Vietnam and Brunei are members of the 10-nation Association of South East Asian Nations (ASEAN), which in turn has free trade agreements with Japan, Australia and New Zealand, China, India and South Korea. Mexico, Peru and Chile are members of the four-nation Pacific Alliance with Columbia. In addition, China is leading the formation of the Regional Comprehensive Economic Partnership which includes all of the non-Americas members of the CPTPP in addition to China, South Korea and the other members of ASEAN.

The CPTPP replaced the original proposal for a Trans-Pacific Partnership (TPP) that would have included the US, but the remaining nations decided that it was still worthwhile pursuing a revised trade arrangement even after the US withdrew its application four years ago. A new administration could see the USA change its mind and seek to join the CPTPP after all.

Why does the UK want to join a trade pact on the other side of the world? The immediate trade benefits are likely to be relatively modest given the distances involved and which are likely to be secured through bilateral trade agreements already under discussion.

One reason is likely to be geo-political, as membership would strengthen relationships with allies in the Pacific, advancing the UK Government’s ‘global Britain’ agenda. There may also be an advantage in being directly involved in the development of international trade policy in the Pacific region which contains the two largest individual economies in the world (the US and China), potentially influencing trade policy across the planet.

Of course, part of the motivation might be less about trade in the Pacific and more about trade across the Atlantic. After all, if the US were to join the CPTPP, the UK’s membership might provide a base from which to eventually develop a more comprehensive bilateral free trade agreement. This could fulfil a key strategic objective of improving trade ties with the USA by going around the world, albeit in a lot more than 80 days!

This chart was originally published by ICAEW.

ICAEW chart of the week: UK trade in goods

With less than a month to go before the UK leaves the EU Single Market and Customs Union, trade is high on the agenda as negotiations between the UK and the EU go down to the wire.

UK trade in goods in the year to September 2020: exports £338bn & imports £420bn EU: £153bn & £230bn Continuity deals: £49bn & £43bn USA: £53bn & £38bn China: £32bn & £54bn Other: £51bn & £54bn

The #icaewchartoftheweek this week is on international trade, illustrating how exports and imports of goods amounted to £338bn and £420bn respectively in the year to 30 September 2020. This excludes £289bn and £181bn of services exports and imports over the same period that are also extremely important, but which are not the principal subjects of the free trade deal currently being negotiated.

The UK’s largest trading partnership for goods is with the members of the EU Customs Union (together with Turkey for non-agricultural products), with the UK exporting £153bn (45% of total goods exports) and importing £230bn (55% of total goods imports). 

This is followed by a further £49bn (15%) of exports to and £43bn (10%) of imports from 52 countries that have trade deals with the EU that the UK has been able to agree replacement trade arrangements with. These include Norway, Switzerland, Japan, South Korea, Canada and South Africa, with discussions underway to roll-over trade deals with a further 13 countries not included in these numbers, in particular with Singapore and Vietnam.

The UK’s two largest individual trading partners are the USA and China, where the UK will continue to trade on World Trade Organisation (WTO) terms. The UK exported £53bn (16%) of goods to the USA and imported £38bn (9%) in the year to September, while it exported £32bn (9%) to China and imported £54bn (13%).

The balance of goods trade, comprising exports of £51bn (15%) and imports of £54bn (13%), is with over 130 other countries and territories where the UK does not have a trade deal in place for after 1 January 2021, including India, Russia, Vietnam, Taiwan, the UAE, Saudi Arabia, Qatar, Thailand, Singapore, Australia, Malaysia and Nigeria.

Both exports and imports of goods have reduced in the year to September 2020 compared with a year previously, with exports down 7% and imports down 18%. The principal driver of the fall is the coronavirus pandemic, although reconfiguration of cross-border supply chains ahead of the end of the transition period may also be a factor.

Although global trade is expected to pick up in 2021 once covid-19 vaccines are widely available, there is significant uncertainty as to the effect on trade of the UK’s departure from the Single Market and Customs Union – with or without a deal. Either way, increased trade frictions are likely to have at least some impact, while the imposition of tariffs in the event of no deal could cause significant additional problems for key sectors such as car manufacturing and agriculture.

The size and closeness of the EU economy means that it will continue to be the most important trading partner for the UK whatever is agreed. If only we knew on what terms we are going to be trading in less than a month’s time and what the major changes that are coming in January will mean for the future!

This chart was originally published on the ICAEW website.

ICAEW chart of the month: UK international trade

Imports £718bn: EU £369bn, EFTA £34bn, USA £87bn, Other Americas £26bn, Asia-Pacific £138bn, Other £64bn. Exports £673bn: EU £297bn, EFTA £29bn, USA £133bn, Other Americas £29bn, Asia-Pacific £108bn, Other £77bn.

With recent changes in ICAEW communications, the ICAEW Public Sector team has started an #icaewchartofthemonth to complement the #icaewchartoftheweek.

The first #icaewchartofthemonth was published on the ICAEW’s Insights Hub (icaew.com/insights) on Friday 31 January 2020 and is on the UK’s international trade. It highlights how important the £718bn in imports and £673bn in exports in the year to 30 September 2019 are to the economy of the UK.

As the UK Government starts to negotiate new trade arrangements with countries around the world, the EU will be the highest priority. Imports into the UK of £369bn represent 51% of total imports and exports to the 27 EU countries of £297bn are 44% of total exports. This is followed by the USA, where imports of £87bn and exports of £133bn represent 12% and 20% respectively.

Trade relationships with countries in the Asia-Pacific region will also be very important, in particular China (imports £60bn and exports £39bn), Japan (£17bn and £15bn) and the 10-country Association of South East Asian Nations (£22bn and £19bn).

https://www.icaew.com/insights/features/2020/jan-2020/uk-international-trade