International trade in services by subnational areas of the UK: 2018

• In 2018, London contributed 63% of the UK trade in services surplus, importing £67.1 billion of services and exporting £136.4 billion of services.

• The main contributors to London’s trade surplus were financial and insurance services and professional, scientific and technical activities, at £29.3 billion and £17.0 billion respectively.

• The largest proportion of service imports came through travel services, representing 26% of the UK total service imports and contributing at least one-quarter of imports in every region except London.

• Most UK service exports were from the financial and insurance industry, generating 30% of the total service exports and contributing nearly half of Yorkshire and The Humber's exports.

• City regions imported 58% of their non-travel services from outside the EU and exported 60% of their services to non-EU countries.

In 2018, the UK was a net exporter of services with a trade surplus of £109.6 billion. All nine English regions and the three devolved nations contributed positively to the trade in services surplus, with London accounting for 63% or £69.4 billion, as seen in Figure 1. This was followed by the South East (with a surplus of £13.8 billion or 13%), Scotland (with a surplus of £7.1 billion or 6%) and the West Midlands (with a surplus of £6.2 billion or 6%). For all other NUTS1 areas, the surplus accounted for up to 3% of the total trade surplus.

The largest share of service imports at the regional level came into London, which comprised 34% of the total service imports of £197.3 billion in 2018, followed by the South East (14%) and East of England and North West, which both comprised around 9% of the total service imports into the UK.

The largest share of service exports at the regional level came from London, which contributed 44% of the total service exports of £306.9 billion, followed by the South East (14%) and North West and Scotland, which both comprised around 7% of the total service exports.

The largest proportion of service imports came through travel services, representing 26% (or £51.8 billion) of the UK total service imports of £197.3 billion. Of that portion, £46.1 billion was attributed to personal travel and £5.8 billion was attributed to business travel. Thereafter, the financial and insurance activities (£36.9 billion or 19%); information and communication (£24.3 billion or 12%); and professional, scientific and technical activities (£21.4 billion or 11%) industries made up the largest shares of service imports.

Focussing on London as the largest importer, three industries formed a very large part of London’s service imports: financial and insurance activities; information and communications; and travel. When added together, these three industries contributed two-thirds (66%) of London’s overall service imports. London was the largest region for service imports in all but two industry groups: primary and utilities and manufacturing. Scotland imported 37% of all service imports in primary and utilities, while the North West had the largest share in manufacturing service imports (19%).¹

Most UK service exports were from the financial and insurance activities industry, generating 30% (£93.0 billion) of the total service exports. Service exports in the information and communication and professional, scientific and technical industries also formed substantial shares, which each accounted for around 16% of the total service exports.

Focussing on London as the largest exporter, three industries formed a very large part of London’s service exports: financial and insurance activities; information and communication; and professional, scientific and technical activities. When added together, these three industries contributed three-quarters (75%) of London’s overall service exports. London was the largest region for service exports in all but two industry groups: primary and utilities and manufacturing. Scotland exported 59% of all service exports in primary and utilities, while the South East had the largest share in manufacturing service exports at 16%.

Notes for: Trade in services by the English regions and three devolved nations

1. Service imports by the manufacturing industry can be directly linked to manufacturing, such as the installation of machinery, as well as other services that may be performed by manufacturers, such as 0% financing or offering extended warranties. It does not refer to the exports of manufactured goods.

For the UK as a whole, the trade in services surplus was significantly higher with countries outside the EU at £82 billion, compared with £27.6 billion within the EU; that is, countries outside the EU accounted for around three-quarters of the trade in services.

In the UK, £97.0 billion came from service imports arriving from countries within the EU, whereas £100.3 billion came from service imports arriving from outside the EU; this is an almost even split of 49% versus 51%. However, because travel services were calculated using a different process to that of other industries, as described in our previous article, and because travel is dominated by EU imports (62%) rather than rest of the world imports (38%), it seems appropriate to analyse the remaining industries separately.

When travel-related services are excluded from analysis, £65.1 billion came from service imports arriving from countries within the EU, whereas £80.4 billion came from service imports arriving from outside the EU. This discrepancy is largely accounted for by London but also by Scotland and the South East, as non-travel imports from the rest of the world were estimated as being somewhat higher than imports from the EU. Most other regions showed a more balanced exchange of trade, with the North West, the East Midlands and the West Midlands approximately displaying a 50% EU and non-EU split. The only region to receive considerably more imports from the EU than the rest of the world was Northern Ireland (67% compared with 33%).

For the UK service exports, £182.3 billion went to outside the EU while £124.6 billion went to the EU. For most regions (except for Northern Ireland and the North East), exports to the rest of the world were estimated to be higher than exports to the EU. Most of the other regions typically exported between 55% and 65% of their service exports to non-EU countries, as shown in Figure 2. However, for two industry groups (retail and wholesale and motor trades), exports to the EU were higher than to the non-EU overall, which is reflected in most of the regions. The most equal distribution of total service exports was seen in the North East, which according to our estimates exported £3.5 billion to the EU and £3.4 billion to the rest of the world.

Together, the 15 city regions¹ (the seven English Combined Authorities, the Sheffield City Region, Inner and Outer London, and three Scottish and two Welsh City Deals) contributed £107.3 billion to the UK’s trade in services surplus. Inner London accounted for two-thirds of this surplus at £71.3 billion, with a large gap to the next largest region of Outer London at 9% or £10.1 billion.

The 15 city regions received three-fifths (£85.2 billion) of the UK’s non-travel service imports. We cannot analyse travel-related trade at this level; therefore, this analysis focuses on trade allocated to specific industries, with the numbers presented much lower than the expected total if travel was included.

Figure 3 shows that Inner London imported the highest value of non-travel services by a considerable amount, contributing £42.1 billion (just under half of the £85.2 billion). This was followed by Outer London, which spent £13.0 billion on non-travel service imports, with a large gap between this and the next largest region of Greater Manchester with £4.7 billion.

Together, the 15 city regions contributed more than 63% (£192.5 billion) of the UK’s service exports. Inner London exported the highest value of services in 2018 at £113.4 billion, followed by Outer London (£23.1 billion) and Greater Manchester (£8.4 billion).

For service exports, financial and insurance activities were the largest industry in 11 city regions and in the top three industries for 13 of the 15 city regions, with the exceptions of Aberdeen City Region and Outer London. Professional, scientific and technical activities were also prominent and formed one of the top three industries in 10 city regions. It formed the largest industry group in Cambridgeshire and Peterborough and in Aberdeen.

For most industries, either Inner or Outer London were the largest city regions for exports, except for manufacturing, for which Cardiff Capital Region had the largest value, and non-manufacturing production services, which was dominated by Aberdeen City Region.

Notes for: Trade in services by city regions

1. For the city regions, two changes have been made to the industry groups used at the NUTS1 level: primary and utilities and construction have been combined to form “non-manufacturing production” services, and real estate has been added to “other services”.

City regions imported most of their non-travel services from outside the EU as, of the £85.2 billion spent by city regions on non-travel imports, 58% (£49.3 billion) came from the rest of the world. Every city region imported more of their non-travel services from outside the EU. The biggest absolute difference lies within Inner London, which imported £25.7 billion of non-travel services from the rest of the world and £16.4 billion from the EU.

City regions exported most of their services to non-EU countries as, of the £192.5 billion spent by city regions on exports, 60% (£116.1 billion) went to the rest of the world. As shown in Figure 4, most city regions exported more to non-EU countries, with the exception of Tees Valley Combined Authority where 59% of their service exports went to the EU. Inner London saw the biggest absolute difference between EU and non-EU exports, exporting £42.7 billion to the EU and £70.7 billion to non-EU countries.

For the 168 NUTS3 areas in Great Britain – because of a lack of coverage in survey data, we are unable to break down Northern Ireland to this level – we only provide an EU versus non-EU split in terms of a services country of origin and do not provide industry information. This is largely because of concerns around reliability and confidentiality at such a detailed breakdown. Much like with the most recent exports of services publication and most recent imports of services publication, please note that these figures are experimental and should be treated with caution. The more granular they become, the more susceptible they are to variation, and as such they are not as reliable as the NUTS1 figures.

The average value of non-travel service imports was much higher in London at £2.6 billion compared with £0.6 billion for all other areas. Within London, the largest importer was Camden and the City, which received £16.0 billion. The NUTS3 area outside of London with the largest amount of non-travel service import value was Berkshire with £4.8 billion.

The average value of service exports was much higher in London at £6.5 billion compared with £1.1 billion for all other areas. The two largest exporters are both found in London, with Camden and the City exporting £39.3 billion, followed by Westminster at £32.9 billion. The NUTS3 area outside London with the largest amount of service export value was Berkshire with £9.8 billion.

NUTS

The Nomenclature of Territorial Units for Statistics (NUTS) is a hierarchical classification of administrative areas, used across the EU for statistical purposes.

A full Glossary of economic terms is available.

This article presents estimates of the value of imports and exports of services in 2018 to and from subnational areas of the UK. This article is the first of its kind following the first outputs from a project on subnational exports of services in 2016. The estimates generated as a result of bringing imports and exports of services together improve the coherence of outputs and allow for comparison of net trade flows. In combination with estimated trade in goods by HM Revenue and Customs (HMRC) through their Regional Trade Statistics, this article completes the full set of trade statistics for subnational areas.

This article implements the previously used methodological approach for calculating imports and exports of services as outlined in the preceding articles International imports of services from subnational areas of the UK and International exports of services from subnational areas of the UK.

This article is a new output. All figures presented in this article are experimental, derived from a methodology that is subject to change based on feedback and that should be used with caution.

Aside from this change, the International Trade in Services (ITIS) Survey, which is used for subnational service exports and imports not related to travel, transport and banking industries, went through some improvements. From 2018, product- and industry-level data have been improved by directly surveying companies operating in some industries, where previously data collected from the Annual Business Survey (ABS) had been used. This has enhanced the accuracy and granularity of ITIS Survey data. More about the quality and methodology information for ITIS Survey data detailing recent improvements can be found in the ITIS QMI, published 31 January 2020.

These estimates remain experimental as development work continues. While we have met an important milestone by providing estimates of both imports and exports in one publication, we intend to review our current processes and methodology in the coming months.

Our longer-term aim is to create an annual output of subnational trade, ideally incorporating information on goods from HM Revenue and Customs (HMRC) to build the entire picture of subnational trade.

We welcome feedback from users through emailing the statistical contact for this release, particularly with suggestions for improving the methodology and comments on whether this approach meets user needs.