Today is Friday and you all know what that means – we blog about Sectors. This week, keeping in line with the launch of Manufacturing: Our Future in Europe
report, I will answer some important questions: How important is the EU for UK trade? And how do the top exports to EU and non-EU markets differ?Let's start by looking at how important Europe is for our overall trade.Europe is our single biggest market
- 50% of our exports go to the European Union in 2012
- 51% of our imports are European in 2012
Over time we have a shifting trend towards a higher proportion of our trade taking place with countries outside the EU. In 2000, 60% of exports went to EU countries but this has dropped over time as UK companies have strengthened ties with Non-EU countries. Opening up trade with emerging markets and more non-tradition locations, places such as Brazil and Indonesia for example, are important parts of manufacturers' strategies to grow.But that doesn't mean our exports to the EU are not growingIn fact, we have continued to see both EU exports and EU imports continue to grow over time. Exports have grown from £113 billion in 2000 to over £150 billion in 2012 and imports have grown too, from £117 billion to over £200 billion over the same period.And non-EU markets will not be able to substitute for the EUSome Euro-sceptics claim that non-EU markets can be a substitute for the EU. However, looking at a breakdown of our exports to these different markets shows that our top export to EU markets are not the same as those to non-EU markets.The list below shows the top 10 exports to each market.
As you can see, there is a lot of cross-over and some goods sell well to both non-EU and EU markets. This is not surprising and reflects the UKs competitive advantage in some of these sectors. There is no guarantee though, that if our exports to one market were to be reduced, there is sufficient market demand from other geographical locations to make up the gap.There are also a number of goods that sell well to European markets but do not feature in the top 10 for non-EU markets and vice versa. Petroleum products, organic chemicals, natural gas and telecommunications equipment are among the top 10 products exported to the EU but do not feature in the top 10 exports to non-EU markets. These products have a combined export value of £38.8 billion.Similarly, instruments, specialist machinery, non-metallic minerals and beverages with a combined export value of £19 billion, are among the top exports to non-EU markets but are not among the most important exports to EU countries.All markets are vitalThis tells us that all markets are important for the UKs competitiveness. And different sectors rely on different markets for their exports. We should be looking to maximise our manufacturers export potential in all markets.