The United Kingdom continues to face challenges with its exports post-Brexit, with a noticeable decline in goods being sold abroad compared to pre-Brexit levels. Recent data from the Office for National Statistics (ONS) reveals that the volume of goods exported was approximately 15 per cent lower in the three months leading up to December, a drop from the records set in 2018. Conversely, the export of services has shown significant growth, surpassing pre-pandemic peaks.
This shift in the UK’s export landscape reflects a reliance on selling services over goods, as the country struggles to compensate for diminished European Union demand post-Brexit. Despite efforts to bolster trade with non-EU countries, the EU remains a crucial trading partner for the UK, making it challenging to offset any lost trade.
Analysis from the ONS indicates that while exports of goods to non-EU nations have increased more rapidly than those to the EU since 2010, the UK’s deficit with the EU has widened due to higher imports from the bloc. As the UK grapples with this trade imbalance, there is a growing focus on leveraging services exports to drive economic growth.
The rise in services exports aligns with a global trend where services trade outpaces goods trade, signaling a shift towards a knowledge economy. High-value service industries like artificial intelligence and technology are emerging as key drivers of the UK’s export growth strategy. According to McKinsey research, services trade has been growing at a much faster rate than goods trade in recent years.
Former Brexit negotiator David Frost is poised to address the impact of Brexit on UK trade and explore opportunities for closer trade ties with the EU. As the UK aims to position itself as a leading player in high-value services, there is optimism that diversifying its export base beyond goods could fuel sustainable economic growth.
The data underscores the importance of striking a balance between goods and services exports, as the UK navigates post-Brexit trade dynamics. The UK government’s vision for a knowledge-led economy underscores the strategic shift towards services exports, positioning the country to capitalize on emerging global trade trends.
