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Importance of trade with the EU for UK industries

Published Tuesday, August 1, 2017

This briefing paper looks at the importance of trade with the EU for the sectors and industries of the UK economy. Industries that are highly integrated into the European Single Market face higher risks from Brexit, if Brexit makes trade with the EU more difficult.

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This briefing paper looks at the importance of trade with the EU for UK sectors and industries. Both imports and exports matter to firms, and this briefing considers both.

Exports are a source of revenue for firms. Imports are costs, but they should also be thought of as inputs that enable firms to produce and be more competitive. For example, UK car manufacturers import components from the continent because these components are not available in the UK, or not available at the right quality and/or price.

High levels of trade with the EU indicate that an industry is highly integrated into the European Single Market. These industries face higher risks from Brexit, if Brexit makes trade with the EU more difficult.

The analysis uses the ONS’s UK input-output analytical tables for 2013 (released 9 March 2017). These tables cover the entire UK economy, including the public and non-profit sectors. They take a long time to compile, and this is why figures are for 2013. The complexities of the source data and the difficulties in measuring such detailed information mean that this analysis should not be understood to provide exact percentages. Rather, its purpose is to give a sense of how different industries compare in terms of their trade with the EU.

On the export side, the three sectors most reliant on the EU market for their revenues are mining and quarrying (think oil and gas) at 43% of the sector’s total revenues, manufacturing at 21%, and financial services at 10%. On the import side, the three sectors most reliant on the EU market for their inputs are manufacturing at 20% of total non-staff production costs, health services (mostly the NHS) and social care at 18%, and accommodation and food services at 15%.

Exports to the EU as percentage of revenues by sector

EU imports as percentage of inputs by sector

Commons Briefing papers CBP-8065

Author: Federico Mor

Topics: Economic policy, Industry, International trade, Manufacturing industries, Service industries

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