#usa – Martin Wheatcroft

ICAEW chart of the week: US federal finances FY25

My chart for ICAEW this week looks at how the US federal government is funded and what it spends its money on.

The US federal government financial year ends in September each year and our chart this week takes a look at the provisional monthly receipts and payments statement for September 2025 (FY25).

According to preliminary numbers from the Bureau of the Fiscal Service, part of the US Department of the Treasury, the US federal government collected $5.2tn (17% of GDP or $1,275 per person per month) in taxes during the year ended 30 September 2025 and paid out $7.0tn (23% of GDP or £1,710 per person per month).

The shortfall of $1.8tn (6% of GDP or £435 per person per month) was funded by borrowing.

As our chart illustrates, the federal government’s tax receipts of $5.2tn comprised $1.7tn (6% of GDP or $425 per person per month) from social security contributions, $2.7tn (9% or $655) from income taxes, $0.5tn (1% or $110) from corporate taxes, and $0.3tn (1% or $85) from customs duties, excise taxes, and miscellaneous taxes.

Outlays comprised $1.6tn (5% of GDP or $385 per person per month) on social security programmes (principally pensions and unemployment insurance), $3.0tn (10% or $745) on health care programmes and subsidies (principally Medicare for retirees, Medicaid for children, the poor and those with disabilities, and Affordable Care Act subsidies for lower earners), $1.0tn (3% or $235) on net debt interest, $0.9tn (3% or $225) on US Department of Defense military expenditures, and $0.5tn (2% or $120) on the federal government excluding the military.

These numbers are (for the most part) cash receipts and payments. The US federal government’s accrual-based audited financial statements, prepared in accordance with standards issued by the US Governmental Accounting Standards Board, are normally published in the following February.

They may also seem quite low when compared with the UK’s public finances for example, but that is primarily because they exclude receipts and payments by the states, counties and city governments that provide most public services in the US in addition to their own welfare programmes.

Despite that, it may still be surprising to see how little the federal government costs once welfare programmes, debt interest and military programmes are excluded – just $0.5tn or $120 per person, less than 2% of GDP. This is the result of benefits of scale, a strong economy and the decentralised nature of government in the US.

Having said that, policymakers are concerned about rising debt interest and a widening deficit, which is expected to grow further in 2026 as the current administration’s tax cuts take effect and outweigh the planned spending reductions for FY26.

For more information about the US federal finances, visit FiscalData on the US Department of the Treasury website.

This chart was originally published by ICAEW.

ICAEW chart of the week: The cost of (government) borrowing

My chart for ICAEW this week looks at the cost of government borrowing by country based on 10-year government bond yields.

The calculated yield on 10-year UK government gilts on Wednesday 8 October 2025 at around 13:00 BST was 4.7% – the effective interest rate the government would need to pay if it had issued new debt at that time.

As my chart of the week for ICAEW illustrates, the UK now has the highest government borrowing cost among developed countries, compared with Switzerland 0.2%, Japan 1.7%, Germany 2.7%, Canada 3.2%, Spain 3.2%, Italy 3.5%, France 3.5%, the US 4.1% and Australia 4.4%.

With debt interest running at around 10% of total public expenditure, the cost of borrowing is a major issue for the Chancellor as she puts together the Autumn Budget 2025.

Reasons for the relatively high borrowing costs in the UK include persistently high inflation, growing public debt, an uncertain economic and fiscal outlook, the Bank of England’s quantitative tightening programme of selling its quantitative easing gilt holdings into the market, and reduced demand from debt investors.

This contrasts with Switzerland, where a strong currency, low public debt (around 37% of GDP), low inflation, and a lower-than-expected forecast for the fiscal deficit in 2025 permits the government to pay almost nothing to borrow at the moment.

Eurozone countries also pay less than the UK, even those with high debt levels such as Italy and France, with lower inflation (2.0% vs 3.8% in the UK in August 2025) being a major driver of lower yields on 10-year government bonds. Canada, with much stronger public finances than most developed countries but rising inflation and trade concerns, is paying more than Germany but approximately the same as Spain.

The US is currently paying 4.1% for new federal government borrowing, with rising inflation and growing fiscal deficits all contributing to a higher risk profile for debt investors. Australia is paying slightly more than the US despite much stronger public finances as it struggles to bring down inflation (3.0% in the year to August 2025).

Not shown on the chart are other countries with lower 10-year borrowing costs than the UK such as Singapore at 1.8%, the Netherlands at 2.8%, South Korea at 2.9%, Portugal at 3.1%, Greece at 3.3%, and New Zealand at 4.2%. There also countries with higher 10-year borrowing costs, including India at 6.5%, Mexico at 8.8%, and Brazil at 14.0%.

For the UK, the headlines have tended to focus on the 5.5% yield payable on 30-year government gilts, but in practice the Debt Management Office is currently issuing very little long-dated debt. The majority of gilts by value are being issued for less than 10 years, reflecting an expectation (or hope) that medium- and long-term borrowing costs will come down over the next few years as inflation returns to target and the volume of quantitative tightening slows.

A substantial proportion of the £3.2tn that the UK public sector current owes (£2.9tn after deducting cash and liquid financial assets) was borrowed when interest rates were much lower, meaning the government is currently paying somewhere in the region of 3% on its debts overall.

Unfortunately, the need to issue £1.3tn in new debt over the next five years (around half to refinance existing debt as it falls due for repayment and another half to finance planned fiscal deficits, lending and working capital requirements) means that the average weighted effective interest rate on UK debt is likely to increase even as the Bank of England base rate (currently 4.0%) is expected to come down.

This chart was originally published by ICAEW.

ICAEW chart of the week: One Big Beautiful Bill Act 2025

My chart for ICAEW this week looks at the impact on the US federal government deficit of the major tax and spending changes passed by Congress and signed into law by President Trump on 4 July 2025.

ICAEW chart of the week: A step chart showing the projected effect of the One Big Beautiful Bill Act 2025 on the average annual US federal government deficit between FY2025 and FY2034.

Left hand column: Baseline projection $2,109bn.

Steps 1 to 3 (shaded): Spending cuts -$110bn plus Tax cuts +$449bn plus Extra interest +$68bn.

Step 4: Net change +$407bn (total of steps 1 to 3).

Right hand column: Revised projection $2,516bn.

25 Jul 2025. Chart by Martin Wheatcroft FCA. Design by Sunday.
Sources: Congressional Budget Office; ICAEW calculations.

My chart this week looks at the impact on the US federal government deficit of the major tax and spending changes passed by Congress and signed into law by President Trump on 4 July 2025.

The Congressional Budget Office (CBO) published on 21 July 2025 its assessment of Public Law 119-21 (the 21st law passed by Congress in its 119th session), also known as the One Big Beautiful Bill Act 2025 (OBBBA).

OBBBA was passed by Congress and signed into law by President Trump on 4 July 2025 and contains sweeping changes to the US federal tax system as well as a significant shift in spending priorities.

The chart this week attempts to illustrate the impact of OBBBA on the federal deficit by looking at how it changes the average annual projected deficit over the next 10 years from FY2025 (the current fiscal year ending on 30 September 2025) to FY2034, compared with the CBO’s baseline projection.

The baseline projection, published by the CBO in January 2025, was for the federal government deficit to increase from $1,865bn in FY2025 to $2,597bn in FY2034, an average deficit over the 10 years of $2,109bn or 5.8% of GDP.

According to the CBO, OBBBA is expected to increase the federal deficit each year by $339bn on average over the period to FY2034, with a net cut in federal spending of $110bn on average offsetting a net cut in revenues of $449bn. The CBO’s assessment does not take account of the additional cost of financing these higher deficits, which ICAEW calculates would add a further $68bn a year on average to the interest bill.

The consequence is a net increase in the annual federal deficit of $407bn on average over 10 years, taking it to an average of $2,516bn or 7.0% of GDP.

Net spending cuts of $110bn comprise spending increases of $66bn a year on average, net of spending reductions of $164bn a year and incremental ancillary income that is deducted from spending of $12bn. Extra spending includes an extension of child tax benefits ($19bn a year on average) and more money for homeland security and immigration enforcement ($18bn), the military and coastguard ($17bn), farm subsidies ($5bn), air traffic control ($1bn), the mission to Mars ($1bn) and other items ($5bn).

Spending reductions include cuts in Medicaid and Medicare programmes ($106bn on average each year), education and student loan relief ($30bn), other welfare and health programmes ($19bn), clean energy subsidies ($8bn) and other cuts ($1bn), while ancillary income comprises $9bn on average from spectrum auctions, $2bn from oil and gas leases, and $1bn extra from higher visa fees.

Net tax cuts comprise $511bn a year in tax cuts less $62bn a year in tax increases.

Tax cuts include making previous temporary tax cuts permanent ($379bn), business tax reforms ($97bn), personal tax reforms ($26bn), energy related tax credits ($4bn), Medicaid and Medicare related tax deductions ($3bn), and other ($2bn). Tax increases include the termination of tax reliefs for clean energy ($47bn a year), addressing tax loopholes ($6bn), additional immigration fees included in revenue ($4bn), taxing low-value international shipments ($4bn) and other ($1bn).

The CBO doesn’t directly conclude what this will mean for the US national debt (debt held by the public), which was expected in January’s baseline projection to increase from $28.2tn or 98% of GDP at the start of the current financial year to $49.5tn or 117% of GDP on 30 September 2034. Adding $4.1tn over 10 years to that amount suggests this would increase to $53.6bn or 127% of GDP.

These numbers don’t take account of the anticipated economic boost of lower taxes that should partially offset some of the tax impacts set out in the CBO’s analysis, as well as increasing the denominator in the deficit to GDP ratio. However, they also don’t take account of other factors such as US trade policy – including the additional tax receipts from tariffs and the potential effect that those higher taxes will have on the US economy – or many other policies of the US administration. We will need to wait for the CBO’s next full economic and fiscal projections later in the year to understand more about what that might mean.

Either way, the OBBBA will go down as one of the most consequential legislative acts of the US Congress in recent years.

This chart was originally published by ICAEW.

ICAEW chart of the week: Global GDP

My chart for ICAEW this week looks at the relationship between population and GDP around the world.

A three column chart each adding up to 100% with the central bar showing percentages of the global population, the left-hand bar showing percentages of market GDP. and the right-hand bar showing percentage of power-purchasing-parity (PPP) GDP. The bars are linked with lines to emphasise the relative proportions.

US & Canada: Market GDP 29% - Population 5% - PPP GDP 16%.
Europe: Market GDP 23% - Population 7% - PPP GDP 18%.
China: Market GDP 17% - Population 17% - PPP GDP 20%.
Rest of the world: Market GDP 24% - Population 28% - PPP GDP 30%.
South Asia & China: Market GDP 7% - Population 43% - PPP GDP 16%.

27 Jun 2025. Chart by Martin Wheatcroft. Design by Sunday. Source: IMF, 'World Economic Outlook Database, Apr 2025'.

According to the latest World Economic Outlook Database published by the International Monetary Fund in April 2025, the 387m people that live in the US and Canada, some 5% of the global population of 8.1bn, are together expected to generate about 29% of global economic activity as measured by GDP converted at market exchange rates in 2025.

The US – the largest economy in the world – is expected to generate 27% with 4.3% of the global population, while Canada with 0.5% of the world’s people represents 2% of the global economy.

My chart this week also shows how the US and Canada together constitute 16% of the global economy using GDP converted on a Purchasing-Power-Parity (PPP) basis that adjusts for the relative cost of living between countries. The US is the world’s second largest economy on this basis with 15% of total economic output, while Canada represents 1.3% of the total.

Europe’s 602m people are 7% of the global population (excluding Russia, but including Georgia) and are expected to generate around 23% of global economic output at market exchange rates in 2025 or around 18% on a PPP basis.

This includes the 452m people or 5.6% of the total living in the EU that generate 18% of global output or 14% on a PPP basis, the second largest economy on a market exchange rate basis and the third largest after adjusting for purchasing power. Germany with 1% population generates 4.3% and 3% of market GDP and PPP GDP respectively, followed by France (0.8% generating 2.9% and 2.2%), Italy (0.7% generating 2.2% and 1.8%), Spain (0.6% generating 1.6% and 1.4%), the Netherlands (0.2% generating 1.2% and 0.7%) and Poland (0.5% generating 0.9% and 1%).

Outside the EU, the 70m people in the UK, 0.9% of the world’s total, generate 3.4% of global economic activity on a market exchange rate basis and 2.2% on a purchasing power basis.

China’s 1.4bn people constitute 17% of the world’s population and generate 17% of market GDP, in effect the average level of global economic activity on a per capita basis at current exchange rates. However, on a cost-of-living adjusted basis, they are the world’s biggest economy at 20% of PPP GDP and above average on a per capita basis.

The chart groups the rest of East Asia, South East Asia, Oceania, the Middle East, Russia, Central Asia, Latin America and the Caribbean into a ‘rest of the world’ category with 2.3bn people or 28% of the world’s population. They generate 24% of the global economy on a market exchange rate basis and 30% on a purchasing power basis.

This category includes the 10 ASEAN countries in South East Asia that together make up 8.5% of the world’s population, 3.6% of market GDP and 6.4% of PPP GDP led by Indonesia (3.5%, 1.2% and 1.4%). Others include Japan (1.5% population, 3.6% market GDP and 3.3% PPP GDP), Russia (1.5%, 2.3% and 3.5%), Türkiye (1.3%, 1.1% and 1.8%), Mexico (1.6%, 1.6% and 1.6%), South Korea (0.6%, 1.6% and 1.6%), Australia (0.3%, 1.5% and 1%), Brazil (2.6%, 1.0% and 2.4%), Taiwan POC (0.3%, 1% and 0.8%) and Saudi Arabia (0.4%, 0.8% and 1%).

The final category is South Asia and Africa, which together include many of the poorest countries on Earth, with 43% of the global population but just 7% of the global economy based on market exchange rates and 16% on a cost-of-living adjusted basis.

South Asia’s 2bn people are 24.3% of the world’s population, generating 4.4% of market GDP and 10.3% of PPP GDP. This includes India’s 1.5bn people (17.9% of the global population generating 3.6% and 8.5% respectively), the world’s fifth largest national economy at market exchange rates behind the US, China, Germany and Japan, and the third largest on a PPP basis behind China and the US. It also includes Pakistan (3% of the world’s people generating 0.3% and 0.8% of economic activity) and Bangladesh (2.1% generating 0.4% and 0.9%).

Africa’s 1.5bn people constitute 18.3% of the world’s total, generating just 2.7% of market GDP and only 5.3% of PPP GDP. This includes South Africa (0.8%, 0.4% and 0.5%), Egypt (1.3%, 0.3% and 1.1%), Nigeria (2.9%, 0.2% and 0.8%), Ethiopia (1.4%, 0.1% and 0.2%) and the Democratic Republic of the Congo (1.3%, 0.1% and 0.1%).

The chart illustrates how economic activity, both before and after adjusting for purchasing power, is weighted towards the US and Europe, while South Asia and Africa have a long way to go to become as prosperous.

While this may seem a stiff mountain to climb economically, China’s transformation over the last 30 years provides an example of what is possible, especially as ageing populations in many developed countries reduce their ability to grow as quickly as those countries with much younger demographics such as in South Asia and Africa.

As they say, watch this space.

This chart was originally published by ICAEW.

ICAEW chart of the week: NATO defence spending

Our chart this week looks at how much NATO members would need to spend to meet President Trump’s proposed new target of 5% of GDP for defence and defence-related expenditure.

A two column chart showing NATO defence spending.

Left hand column - USA: £732bn defence spending in 2024, £67bn defence spending to 3.5% of GDP, and £342bn defence-related spending to 5.0% of GDP = £1,141bn total.

Right hand column - Europe and Canada: £408bn defence spending in 2024, £36bn defence spending to 2.0% of GDP, £271bn defence spending to 3.5% of GDP, and £301bn defence-related spending to 5.0% of GDP.

6 June 2025. Chart by Martin Wheatcroft FCA. Design by Sunday. Sources: NATO, 'Annual Report 2024'; ICAEW calculations.

According to NATO, the US and other NATO members spent 3.2% and 2.0% of GDP respectively on defence and security in 2024, with 21 countries meeting NATO’s target of a minimum spend of 2.0%, 10 countries falling short and one (Iceland) for which the guideline does not apply.

Our chart this week illustrates how those 10 countries falling short would need to have spent an additional £36bn in 2024 to reach the 2% of GDP minimum, while the US and NATO Europe and Canada members (including Türkiye) would have needed to spend a further £67bn and £271bn respectively to reach President Trump’s proposed new minimum of 3.5% of GDP.

The chart also shows how the US and other NATO members would need to spend £342bn and £301bn respectively on defence-related expenditure to reach a headline percentage of 5% of GDP. The definition of this spending has yet to be clarified and so it is difficult to know how much of this will be incremental and how much will be met by existing expenditure on infrastructure, security, law enforcement and other public services.

The consequence of a 5% headline target would have been total defence and defence-related expenditure of £2,157bn in 2024 numbers, comprising £1,141bn of spending by the US and £1,016bn of spending by other NATO members.

The 10 countries that would need to have spent more to meet the existing 2% NATO minimum in 2024 are Spain (£10bn), Canada (£9bn), Italy (£9bn), Belgium (£4bn), Netherlands (£2bn), Portugal (£1bn), Slovenia (£0.4bn), Luxembourg (£0.3bn), Croatia (£0.1bn) and Montenegro (£18m).

To reach a 3.5% defence expenditure target would require a substantial expansion in defence budgets with defence expenditure in the US going up by £67bn, Germany by £51bn, France by £37bn, the UK by £33bn, Italy by a further £28bn, Canada by a further £26bn, Türkiye by £15bn, Netherlands by a further £14bn, and Belgium by a further £8bn, with most other countries needing to increase their defence budget, too.

The sole exception is Poland, which already spends more than 3.5% of GDP on defence (4.1% in 2024), while Estonia (3.4%), Latvia (3.4%), Lithuania (3.1%) and Greece (3.0%) each have much less far to go to reach a 3.5% of GDP target than most other NATO members.

According to NATO, the UK spent £66bn or 2.3% of GDP on defence and security in 2024, but this includes expenditure on the security services, counter-terrorism policing and war pensions in addition to ‘pure’ defence expenditure of £57bn or 2.0% of GDP. Whether, and to what extent, these extra elements will end up being reclassified from defence to defence-related expenditure is unclear, but if all of it was then that would add £9bn to the £33bn a year that the UK would need to find to meet a 3.5% defence expenditure target.

The key question will be how long NATO members are given to meet their new targets. The 2.0% minimum guideline was set in 2014 and provided 10 years for members to reach their new targets. Even then, not all of them achieved it.

It is likely to take years to recruit and train significant numbers of new soldiers, sailors and aircrew and procure major items of equipment such as tanks, ships, submarines and aircraft that would be commensurate with such a new target, so even if the money was available immediately (which it won’t be in most cases) most NATO members are likely to resist calls by the US to adopt a new target with effect from 2026.

Whatever happens, it is clear that most NATO members, including the UK, are going to need to increase spending on defence significantly over the next few years – and at a much faster pace than most of them have budgeted for.

Tax rises and more borrowing are therefore likely to be on the agenda in many more countries than the UK alone.

This chart was originally published by ICAEW.

ICAEW chart of the week: Canada’s trade with the US

Our chart this week takes a look at trade between the US and Canada, a major factor in Canada’s recent general election.

A step chart illustrating the differences between Canadian imports and exports in 2024.

Left hand column - US exports to Canada: C$601bn = C$36bn energy + C$442bn goods (excluding energy) + C$123bn services.

Right hand column - Canada exports to the US: C$650bn = C$171bn energy + C$404bn goods (excluding energy) + C$75bn services.

Step 1 - Trade surplus on energy +C$135bn.
Step 2 - Trade deficit on goods -C£38bn.
Step 3 - Trade deficit on services -C$48bn.

2 May 2025. Chart by Martin Wheatcroft FCA. Design by Sunday.

Sources: US Bureau of Economic Analysis; US International Trade Commission. C$1.37 = US$1:00.

Trade between Canada and the US has become a major political issue since the inauguration of President Trump, and is generally accepted to have had a significant influence on the outcome of Canada’s general election on 28 April 2025, with former Bank of England Governor Mark Carney elected as prime minister.

Our chart this week looks at trade between the two countries in 2014, based on statistics from the US Bureau of Economic Statistics and the US International Trade Commission, translated into Canadian dollars at an average exchange rate in 2024 of C$1.37 = US$1.00.

According to these statistics, Canada had an annual trade surplus with the US of C$49bn, representing the difference between imports from the US of C$601bn and exports to the US of C$650bn.

This can be analysed between a net trade surplus of C$135bn on energy and trade deficits of C$38bn on goods (excluding energy) and C$48bn on services. These represent the difference between US exports to Canada of C$36bn, C$442bn and C$123bn for energy, goods (excluding energy) and services respectively and Canadian exports to the US of C$171bn, C$404bn and C$75bn.

The picture presented by the chart is perhaps not entirely surprising given Canada’s abundant natural resources and the intertwining of its economy with that of its neighbour. Canadians collectively receive large amounts of US dollars for supplying energy that are then used to purchase goods and services from the US and to invest in the US.

President Trump’s on/off tariffs on Canada over the past couple of months, together with retaliatory actions by Canada, are believed to have already had a major impact on trade between the two countries, and this will become more visible as data becomes available over the next few months.

It is difficult to know where trade discussions between the two countries will end up, but Canada does have some cards to play, despite being highly dependent on trade with the world’s biggest economy. While import tariffs were part of their original response and remain an option, they also have the ability – used in past trade disputes – to put export tariffs on commodities such as crude oil and lumber that are essential to US industry and the daily lives of consumers.

Doing so could add significantly to the inflationary pressures that the US is already experiencing from the tariffs it has placed on imports from China and the rest of the world.

O Canada.

ICAEW chart of the week: US and China trade

Our chart this week looks at trade between the US and China following the 145% tariffs imposed on China by President Trump in the latest twist in his global trade war.

A three-column step chart showing the trade balance between the US and China.

China exports to the US: $439bn goods + $462bn = $462bn total.

China trade surplus with the US: $263bn.

US exports to China: $144bn goods + $55bn = $199bn total.

11 Apr 2025. Chart by Martin Wheatcroft FCA. Source: US Bureau of Economic Analysis, 'International Trade in Goods and Services'.

According to the US Bureau of Economic Analysis, mainland China generated a trade surplus of $263bn in its trade with the US in 2024, being total exports of $462bn from China to the US less imports into China from the US of $199bn.

As our chart of the week highlights, the vast majority of China’s exports to the US in 2024 were goods, with $439bn sold to US businesses and consumers, while services exports amounted to a much smaller $23bn. Meanwhile the US exported $144bn in goods and $55bn in services in the same period.

China’s overall trade surplus of $263bn can be analysed between a surplus on goods trade of $295bn less a deficit on services of $32bn.

These numbers exclude trade between Hong Kong and the US, where Hong Kong has a trade deficit with the US of $22bn, comprising exports from Hong Kong to the US of $22bn ($7bn goods and $15bn services) less imports from the US into Hong Kong of $44bn ($29bn goods and $15bn services).

Goods exports from China to the US of $439bn in 2024 included $206bn in machinery, electrical and electronic products (including $51bn phones, $36bn computers and $18bn batteries), $42bn chemicals and pharmaceuticals, $37bn clothes and accessories, $30bn toys, games and sports equipment, $25bn metals and metal products, $19bn furniture, $19bn plastics and $17bn vehicles, together with $44bn in other goods.

Goods imported by China from the US of $144bn included $28bn in machinery, electrical and electronic products (including $9bn integrated circuits), $23bn food and drink (much of which was animal foodstuffs), $21bn chemicals and pharmaceuticals, $15bn fuel, $12bn aircraft, and $7bn metal and metal products, together with $35bn in other goods.

While the imposition of such high tariffs on China is likely to cause US consumers and businesses to switch to other sources where they can, in many cases this will not be possible – especially in the near term. This is likely to be the case for the significant proportion of China’s exports that are intermediate goods used by US manufacturers to make their own products – many US businesses reliant on Chinese inputs could find they are no longer competitive with suppliers from elsewhere in the world that are now subject to ‘just’ 10% tariffs (or 25% in the case of cars, steel and aluminium).

So, while we can’t predict what is going to happen in the global trade war launched by President Trump, the current state of affairs of 10% base import tariffs on almost all countries and 145% tariffs on imports from China seems unlikely to last indefinitely.

This chart was originally published by ICAEW.

ICAEW chart of the week: Trade with the US

Our chart this week looks at trade with the US in light of the 10% tariffs imposed on the UK by President Trump on ‘liberation day’.

A three-column step chart showing the difference between UK exports to and imports from the US.

UK exports to the US: £58bn goods + £124bn services = £182bn.

UK trade surplus with the US: £71bn.

UK imports from the US: £56bn goods + £55bn services = £111bn.

4 Apr 2025. Chart by Martin Wheatcroft FCA. Design by Sunday. Source: DBT, 'United States Trade and Investment Factsheet, 21 Feb 2025'.

According to the UK Department for Business and Trade, the UK generated a trade surplus of £71bn during the four quarters ended 30 September 2024, being the difference between seasonally adjusted numbers for exports of £182bn from the UK to the US less imports from the US into the UK of £111bn.

As our chart of the week highlights, goods exports to and imports from the US comprised £58bn and £56bn respectively, while services exports to and imports from the US were £124bn and £55bn.

The trade surplus with the US of £71bn for the year to September 2024 can be analysed between a surplus on goods of just under £2bn and a surplus on services of slightly more than £69bn, according to the statistics collected by the UK Office for National Statistics (ONS).

The £2bn surplus on goods in favour of the UK contrasts with the corresponding US statistics, which report a trade surplus in goods in favour of the US of $12bn (£9bn) in 2024, based on exports from the US to the UK of $80bn (£62bn) less imports from the UK into the US of $68bn (£53bn).

According to non-seasonally adjusted data from the ONS, goods exports to the US in the four quarters to September 2024 totalled £60bn (£2bn more than the £58bn shown in the chart), comprising £37bn in manufactured goods (including £8bn cars, £5bn engines and £2bn aircraft), £7bn pharmaceuticals, £5bn other chemicals, £3bn metals, £3bn food, drink and tobacco, £3bn oil, and £2bn other goods and materials.

Meanwhile non-seasonally adjusted data on goods imports from the US in the same period of £57bn (£1bn more than in the chart) comprised £25bn manufactured goods (including £6bn engines, £3bn aircraft and £1bn cars), £15bn oil and gas, £4bn pharmaceuticals, £4bn other chemicals, £2bn metals, £1bn food, drinks and tobacco, and £6bn of other goods and materials.

The US is the UK’s biggest individual trading partner, with exports to the US representing 22% of total UK exports (goods: 16% of total goods exports; services: 27% of total services exports) and imports representing 13% of total imports (goods: 10% of total goods imports; services: 19% of total services imports).

These numbers compare with the UK’s trade with the EU in the year to September 2024, where exports to the EU were £346bn or 41% of total exports (goods: £178bn or 48% of total goods exports; services: £168bn or 36% of total services exports) and imports from the EU were £445bn or 52% of total imports (goods: £312bn or 55% of total goods imports; services: £133bn or 45% of total services imports).

The UK government was no doubt relieved to have ‘only’ been targeted with 10% tariffs by President Trump. It will also be hopeful that the position of both the UK and US believing they have a small surplus in their goods trade with each other will help in the negotiations for a UK-US trade deal that could potentially see those tariffs lifted.

The government will also be hoping that the global trade war on goods doesn’t affect the UK’s services trade too much, given its importance as an export earner.

This chart was originally published by ICAEW.

ICAEW chart of the week: Gold

With President Trump planning to visit Fort Knox to check up on the US government’s gold reserves, my chart for ICAEW this week looks at just how much gold is owned by governments around the world.

According to the latest statistics from the World Gold Council, sourced principally from the International Monetary Fund (IMF), governments and international financial institutions around the world own 35,864 tonnes of gold. Much of this gold sits in the Bank of England, Fort Knox and in central bank vaults around the world.

At a price of around £74 per gram, the total value of ‘government gold’ adds up to somewhere in the region of £2.7trn. This is estimated to be around one-sixth of the total above-ground stock of gold in the world.

While the US is the largest individual holder of official gold reserves with 8,133 tonnes of gold worth around £600bn, the 27 countries of the EU and the European Central Bank collectively own a total of 11,719 tonnes of gold worth approximately £870bn. This includes Germany with 3,352 tonnes, Italy 2,452 tonnes, France 2,437 tonnes, Netherlands 615 tonnes, the European Central Bank 507 tonnes, Poland 448 tonnes, Portugal 383 tonnes, Spain 282 tonnes, Austria 280 tonnes, Belgium 227 tonnes, Sweden 126 tonnes, Greece 115 tonnes, Hungary 110 tonnes, Romania 104 tonnes and other EU member states with 281 tonnes.

The next biggest holder of gold is the IMF with 2,814 tonnes (worth around £210bn), followed by Russia with 2,336 tonnes (£175bn), China 2,280 tonnes (£170bn), Switzerland 1,040 tonnes (£77bn), India 876 tonnes (£65bn), Japan 846 tonnes (£63bn), Türkiye 615 tonnes (£46bn), Taiwan 424 tonnes (£31bn), Uzbekistan 383 tonnes (£28bn), Saudi Arabia 323 tonnes (£24bn), the UK 310 tonnes (£23bn), Lebanon 287 tonnes (£21bn) and Kazakhstan 284 tonnes (£21bn).

The total for other countries adds up to 3,194 tonnes worth, or around £235bn or so, including Thailand 235 tonnes, Singapore 220 tonnes, Algeria 174 tonnes, Iraq 163 tonnes, Venezuela 161 tonnes, Libya 147 tonnes, Brazil 130 tonnes, Philippines 130 tonnes, Egypt 127 tonnes, South Africa 125 tonnes, Mexico 120 tonnes, Qatar 111 tonnes, South Korea 104 tonnes and the Bank for International Settlements 102 tonnes.

While the level of official gold holdings is partly driven by the economic size of the countries concerned, it also depends on their reserve strategies, with US, German, French and Italian gold holdings making up around 75%, 74%, 72% and 71% of their official reserves respectively, in contrast with 6%, 9%, 11% and 15% for China, Switzerland, India and the UK, for example.

President Trump’s plan to visit Fort Knox to personally inspect his nation’s gold holdings reflects one of the benefits of investing in a physical commodity such as gold – you can count gold bars, weigh them and check their purity, as well as admire its shiny quality. He may have a less satisfying experience in verifying any future strategic crypto-currency reserve, where entries in a ledger are somewhat more ephemeral.

This chart was originally published by ICAEW.

ICAEW chart of the week: UN budget contributions 2025

My chart for ICAEW this week looks at the assessed contributions of member states to the United Nations Regular Budget for 2025.

Pie chart showing proportion of contribution to the UN regular budget.

EU & EFTA nations 24.0%, USA 22.0%, China 20.0%, Commonwealth nations 11.6%, Japan and South Korea: 9.3%, Latin American nations 4.4%, Middle East nations 4.3%, Russia 2.1%, Rest of the world 2.3%.

14 Feb 2025. Chart by Martin Wheatcroft FCA. Design by Sunday. Source: United Nations, 'Regular Budget 2025 assessed contribution percentages'.

The United Nations is funded through a mix of assessed contributions from member states, voluntary contributions from both member states and others, and revenue generated from operations.

In 2023, total revenue for all UN entities comprised $67.6bn, of which $13.8bn was from assessed contributions, $46.8bn from voluntary contributions ($41.0bn earmarked and $5.8bn non-earmarked), and $7.0bn in revenue from operations.

Of the $13.8bn in assessed contributions from member states, $3.3bn in 2023 was for the core activities of the UN itself and our chart this week illustrates the assessed contribution percentages for 2025 for the $3.4bn UN Regular Budget set for 2025.

This highlights how European Union (EU) and European Free Trade Area (EFTA) nations have been assessed to pay 24.0% of the core budget in 2025, followed by the USA (22.0%), China (20.0%), Commonwealth nations (11.6%), Japan and South Korea (9.3%), Latin American nations (4.4%), Middle East nations (4.3%), Russia (2.1%), and the rest of the world (2.3%).

EU and EFTA national contributions are led by Germany (5.7%), France (3.9%), Italy (2.8%), Spain (1.9%), Netherlands (1.3%), Switzerland (1.0%), Poland (0.8%), Sweden (0.8%), Belgium (0.8%), Norway (0.7%), Austria (0.6%), Denmark (0.5%) and Ireland (0.5%). The remaining 18 EU and EFTA members (and three microstates) are expected to contribute a further 2.7% in 2025.

Of the Commonwealth nations, the UK (4.0%), Canada (2.5%), Australia (2.0%), India (1.1%) and Singapore (0.5%) contributed the most, with the remaining 49 members not including Cyprus and Malta (who are included in the EU in this chart) contributing a further 1.5%.

Japan (6.9%) and Korea (2.4%) are assessed to contribute 9.3% between them, while Latin American nations are down to contribute 4.4%, led by Brazil (1.4%), Mexico (1.1%) and Argentina (0.5%) with 1.4% coming from the rest.

Middle East countries are expected to contribute 4.3% between them, with Saudi Arabia (1.2%), Türkiye (0.7%), Israel (0.6%) and UAE (0.6%) being the largest. Another 11 Middle Eastern nations are down to contribute a further 1.2%.

Russia has been assessed to contribute 2.1%, while countries in the rest of the world are expected to put in a further 2.3%, of which Indonesia (0.6%) is the only one to contribute more than half a percent of the total assessment, with the remaining 68 member states collectively contributing a further 1.7% in total.

The assessed contributions for UN agencies and other activities vary from the percentages shown in the chart as they depend on which countries participate in each agency or activity and several other factors. For example, the US has been assessed to pay 26.2% of the UN peacekeeping budget in 2025 (higher than their 22% regular budget contribution), although the US is expected to pay only 25% because of a cap of 25% set by Congress. The UK and France are expected to pay 4.7% and 4.6% respectively (higher than their 4.0% and 3.9% regular budget contributions), while China has been assessed to pay 18.7% (lower than its 20.0% regular budget contribution).

Another example is the World Trade Organisation (WTO) where the US and China are assessed to contribute 11.4% and 11.2% respectively and most other nations contribute a larger share.

One big question for the UN in 2025 will be the extent to which the new US administration reduces the amount it pays to the UN compared with previous years. The total paid by the US was $13bn in 2023, comprising $3.2bn in assessed contributions and $9.7bn in voluntary contributions.

In theory, if the US leaves a UN agency, such as already announced departures from the World Health Organisation and the UN Human Rights Council, then the assessed contributions for the remaining members can be increased to compensate.

The White House has also announced that it is reviewing its membership of the UN Educational, Scientific and Cultural Organisation and that it will withhold a proportionate share of its regular budget contribution that goes towards the UN Relief and Works Agency for Palestinian Refugees in the Near East.

A bigger question will be the extent to which the US cuts its voluntary contributions to UN programmes. A substantial proportion of these voluntary contributions have traditionally come through the US Agency for International Development, where payments have recently been suspended.

This chart was originally published by ICAEW.