How Much Of Our Trade Is Really Dependent On The EU?

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John Redwood’s latest blog explains how the pro-EU lobby are ignoring key trade figures to dupe the Great British Public

Proponents of staying in just have one set of scares to push, related to trade. They begin by telling us more than half our trade is with the rest of the EU.This is not so.

They commit two statistical errors in saying this that are reasonably well known. The first is they are only talking about trade in goods, not trade in services as well where the EU share is lower. Second, they do not adjust the EU figures for the Rotterdam and Amsterdam effects, where we export goods there which are shipped on to export markets outside the EU.

There is a third error. They amalgamate imports with exports, but talk about the consequences as if the figure was our export figure. As we import so much more than we export, it gives a very misleading result.

According to Bank of England figures the EU accounts for 44% of our exports of goods (unadjusted for re export) but 53% of our imports of goods.
If you turn to the definitive figures in the Pink Book published annually by ONS that shows in 2014 the EU accounted for 42% of all the credits to our current account, and 51% of all the debits. It meant the EU accounted for more than 100% of the deficit.

The figure the trade worriers should concentrate on is the 42%, not the more than half which is more imports than exports. If you adjust for re-exports it is under 40%. My recent discussions with the representatives of the German government have confirmed again that Germany has no wish to face new tariffs and barriers to her trade with us should we vote the leave the EU, and would be very keen to find alternative arrangements that allowed her to carry on exporting so much on favourable terms. I reassured them that Vote Leave is not seeking to impose new restrictions on UK/EU trade, nor would we be paying any contribution to the EU which we had just left as some kind of payment to keep the imports flowing!

I was pleased to see over the week-end that the CBI is toning down its position and beginning to recognise that it undermines its own wish to see a successful renegotiation to say they want to stay in come what may. What we need to know now is what renegotiation does the CBI wish to see? What reforms do they want, as they usually say they wish to stay in a reformed EU.

Click here to read this piece in John Redwood’s Diary.

 

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