CAPX recently published a pro-Brexit opinion piece by John Longworth who headed a pro-Brexit pressure group. He argued that the UK were being held to ransom and were being treated like a "vassal state" of the EU in trade negotiations.

He included a specific, unreferenced statistic that makes a strong and checkable claim:

Another interesting statistic is that only 13% of the UK economy and 8% of businesses are involved with EU trade, the remainder being either purely domestic operators or trading instead with the rest of the world. Any deal needs to be primarily favourable to these firms, rather than the EU and also to our predominant service sector, for which there remains no single market in the EU to speak of. The EU was after all, designed to suit German manufactures and French agriculture.

It is the part above (highlighted by me) that I'm interested in (I left the remaining argument in for context only).

I'm skeptical for more than one reason. It doesn't feel right even for me as a consumer. More importantly, the quote doesn't answer the "% of what" question. For example, when it says 8% of businesses, is it simply counting the proportion of all businesses of any size or is it counting a weighted percentage by size? And do the numbers mean anything useful in the context of a complex trading economy?

Are only 13% of the UK economy and 8% of businesses involved with EU trade?


The proportion of all businesses involved in UK trade with the EU is not particularly meaningful as most UK businesses are extremely small and do not themselves trade internationally, even if they are part of supply chains which do. An example might be a Bulgarian builder (theoretically treated as a sub-contractor for tax reasons) resident in the UK who works on a construction project using material imported by the main contractor from France; this would count as a purely UK business trading domestically.

In 2019 according to the Office for National Statistics , UK exports of goods and services to the EU were worth £294 billion (43% of all UK exports, 13% of GDP). UK imports from the EU were worth £372 billion (52% of all UK imports, 17% of GDP).

So you can see where the quoted 13% figure come from: exports of goods and services from the UK to the EU as a percentage of UK GDP. Saying "only" 13% is an expression of opinion as if it should be more: the UK also trades with the rest of the world, but most of its economy (especially services like health and education or most transport) is domestically focussed.

  • 2
    It's interesting to see the numbers framed like that and it's very unsurprising that it is somewhat misleading. I guess it follows that the rest of the world "only" accounts for 17% of the UKs GDP so why bother trading with them either, right? It is probably also worth mentioning that some (or perhaps a lot) of that trading with the rest of the world is through EU trade deals. The implicit assumption is that the UK will be able to increase trade with the likes of Japan and the US once they are free of the EU but seems very unlikely in the short term. – Eric Nolan Nov 3 '20 at 11:01
  • This is a good piece of context but fails to address one of the issues raised by the way the claim is worded. GDP provides a net impact but not a good measure of how much the actual flow of trade is involved with the EU. If, for example, UK car manufacturing uses critical parts from the EU but they don't constitute a huge amount of the value of the car, then the GDP contribution will greatly understate the "involvement" especially if alternatives to those parts are not readily available. – matt_black Nov 3 '20 at 12:39
  • Also, if the proportion of businesses dependent on EU trade is low because most businesses not involved are small, then the proportion of UK business activity dependent on the EU will be far larger than the proportion of businesses involved with the EU. – matt_black Nov 3 '20 at 12:42

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