International trade in services by partner country, UK: January to March 2018

• This bulletin presents quarterly estimates of UK trade in services statistics by 54 countries; these statistics are based on the quarterly International Trade in Services (ITIS) survey.

• The European Union (EU) remained the UK’s largest trading partner for both exports and imports of services in Quarter 1 (Jan to Mar) 2018, while the US was the largest trading partner when considering individual countries.

• UK exports of services decreased from £45,579 million to £37,771 million between Quarter 4 (Oct to Dec) 2017 and Quarter 1 2018, reflecting falls among all regions except Australasia, Oceania and Polar Regions.

• The EU was the largest contributor to the overall £7,808 million decrease in UK services exports in Quarter 1 2018 compared with the previous quarter, with Ireland and Belgium experiencing the largest falls.

• UK imports of services decreased from £20,323 million to £18,908 million between Quarter 4 2017 and Quarter 1 2018, reflecting decreases in services imports from most regions, including the EU and North Americas.

• Comparing trade in services in Quarter 1 2018 with Quarter 1 2017 reveals that the values of both services exports and imports were higher in Quarter 1 2018; exports increased by £900 million and imports by £359 million.

• Despite the notable fall in UK services exports to the EU over Quarter 1 2018 compared with Quarter 4 2017, the value was still higher than that for Quarter 1 2017, rising from £13,898 million to £14,707 million .

• The largest changes in the value of UK services imports in Quarter 1 2018 from the same quarter a year ago were for imports from the EU and the Central and South Americas; imports from the EU were £560 million higher whereas those from the Central and South Americas were £316 million lower.

The International Trade in Services (ITIS) survey is the main source of UK trade in services data, covering most industries but with a number of exceptions: travel; transport; banking and other financial institutions; higher education; charities; and most activities within the legal profession. Data for the excluded industries are obtained from other sources and are not included in this bulletin. Statistics presented are not seasonally adjusted.

Further to increased user demand for more timely and granular trade in services statistics, we increased the sample size of our quarterly ITIS survey from approximately 1,100 to 2,200 businesses to allow for quarterly estimates by country and broad industry grouping to be produced. This bulletin presents the quarterly ITIS survey country-level estimates for all quarters starting in Quarter 1 (Jan to Mar) 2017.

The quarterly ITIS survey accounts for approximately 58% and 45% of total UK trade in services exports and imports respectively. The other sources of trade in services data include information from the Bank of England, our International Passenger Survey and other data sources.

While trade in services statistics presented in this release only relate to industries covered by the ITIS survey (excluding industries such as transport, travel and banking), we do plan to publish quarterly country estimates covering the whole of the UK economy once the systems used to process other data sources have been developed. We are also currently developing methods to allow for the production of quarterly trade in services statistics by broad industry grouping.

You are advised to be cautious when interpreting changes between quarters given that the series is not seasonally adjusted and few data points are presented. The quarterly ITIS estimates are subject to revision as more businesses’ survey responses are received (further detail on response targets is found towards the end of this release).

All statistics presented in this release are based on responses from the quarterly ITIS survey. Annual estimates produced using both the quarterly and annual ITIS surveys will eventually be used to benchmark the annual levels of the quarterly series, while maintaining the quarterly path; however, this will not take place until after December 2018.

UK exports of services (excluding travel, transport and banking) were £37,771 million during Quarter 1 (Jan to Mar) 2018, compared with services imports of £18,908 million, as shown in Table 1. The value of UK exports of services was close to double the value of UK imports of services during this period.

UK exports of services decreased by 17.1% between Quarter 4 (Oct to Dec) 2017 and Quarter 1 2018, while UK imports of services fell by 7.0% during this period. Therefore, there was a fall in the trade in services balance – the value of exports less imports – during the first quarter of 2018.

We now have the fifth quarter of comparable international trade in services by partner country statistics. This enables the value of trade to be compared with the same quarter a year ago. Both UK exports and imports of services are slightly higher in Quarter 1 2018 than they were in Quarter 1 2017. Exports rose from £36,871 million to £37,771 million, or 2.4% higher. The value of imports in Quarter 1 2018 increased by slightly less, rising from £18,549 million to £18,908 million, or 1.9%. The higher growth rate on exports than on imports implies that the trade in services balance also increased, from £18,322 million in Quarter 1 2017 to £18,863 million by Quarter 1 2018.

The value of UK services exports (excluding travel, transport and banking) fell for all continents except Australasia, Oceania and Polar region. The largest decrease between Quarter 4 (Oct to Dec) 2017 and Quarter 1 (Jan to Mar) 2018 was for exports to the EU, which were £3,472 million lower; £18,179 million to £14,707 million. This was largely due to lower services exports to Ireland and Belgium, most notably in exports of transactions between related businesses not included elsewhere and royalties on patents respectively.

There were also notable falls in exports to non-EU Europe and Asia, which were both greater than £1,000 million. Exports to non-EU Europe decreased by £1,318 million whereas those to Asia were £1,166 million lower in Quarter 1 2018 from Quarter 4 2017. In both cases, these changes were due to large falls in exports to a few countries in each region. For those to non-EU Europe, it was Russia and Switzerland that accounted for most of the fall, and in royalties on literary works with Russia in particular. UK services exports to Saudi Arabia were the main contributors to the fall in those to Asia, which were concentrated in the other trade in services product group.

Services exports to Australasia, Oceania and Polar regions maintained the broadly stable trend observed over 2017. Services exports to this region increased slightly, going from £569 million in Quarter 4 2017 to £626 million over Quarter 1 2018. The increase was mainly concentrated in exports to Australia, and for the merchanting and computer services product groups.

It is important to note that these estimates for UK services exports are not seasonally adjusted. Therefore, some variation from quarter to quarter will be explained by the time of the year, where trade in some services could be more likely than at other times of the year. While we do not have enough observations yet to apply seasonal adjustments to this new statistical series, we can compare the value in the latest quarter with that in the same quarter a year ago. Estimates for exports to all continents continued to follow the trends that emerged over 2017. Estimates for Quarter 1 2018 were consistent with upwards trends for exports to the EU and North Americas. In both cases, the value of exports were higher in Quarter 1 2018 than in Quarter 1 2017, by £809 million and £586 million respectively. This comparison also suggests a more modest upward trend in services exports to Australasia, Oceania and Polar regions, which were £136 million higher in Quarter 1 2018 than Quarter 1 2017.

Services exports to the remaining continents were all lower in Quarter 1 2018 than Quarter 1 2017. The emerging trend for these continents appears to be decreasing. The largest decrease on this basis was for UK services exports to Africa (by £250 million), closely followed by those to Asia (by £228 million). For Asia, this is a much smaller decrease compared with that between Quarter 4 2017 and Quarter 1 2018 of £1,166 million.

The ranking of the top 10 export destinations for UK services exports (excluding travel, transport and banking) went to the same 10 partner countries in Quarter 1 (Jan to Dec) 2018 as those in the final quarter of 2017. Over this period the value of exports from the UK fell for all of them, which was slightly off-set by an increase in services exports to the rest of the world. Nevertheless, UK services exports to these 10 countries still accounted for over three-fifths of all UK services exports in the first quarter of 2018.

The US remains the single largest market for UK services exports, accounting for £8,570 million, or 22.7% of all UK exports. The value of exports to Germany was the second highest, having fallen to third highest in Quarter 4 (Oct to Dec) 2017, with exports to Ireland again becoming the third-largest destination. Exports to Germany and Ireland were equivalent to 6.5% and 6.2% of total UK services exports. Taken together, UK exports to the top three countries accounted for 35.4% of all UK services exports (excluding transport, travel and banking).

While the value of UK exports to the top 10 partner countries decreased over the first quarter of 2018, the changes are more mixed when compared with the same quarter a year ago. All of these countries were in the top 10 in Quarter 1 2017 (Table 2); the value of exports has increased for six, fallen for three, and those to Spain had the same value. The largest increase was for exports to the US, which were £530 million higher in Quarter 1 2018 than in Quarter 1 2017, while the biggest decrease was in exports to Saudi Arabia, by £505 million. Despite all of these changes, the top three countries also accounted for over one-third of all UK services exports and the top 10 for around three-fifths.

Imports of services (excluding travel, transport and banking) were lower in Quarter 1 (Jan to Mar) 2018 than Quarter 4 (Oct to Dec) 2017 from the EU and North Americas, and slightly higher from Asia. Imports from the EU changed the most over the quarter of all the continents presented in Figure 2, falling from £8,733 million to £8,189 million, or £544 million lower. However, the upwards trend in imports from the EU was maintained, with the value over the first quarter of 2018 being higher than that in Quarter 2 (Apr to June) 2017. This fall in imports from the EU can be attributed to lower imports from across a range of countries in the transactions between related businesses not included elsewhere product group.

The value of services imports from the North Americas also fell over the latest quarter, going from £4,871 million in Quarter 4 2017 to £4,398 million in Quarter 1 2018. The decrease of £473 million was mainly for imports from the US for the transactions between related businesses not included elsewhere and provision of research and development services product groups.

The trend in services imports from Asia has been stable over the five quarters for which comparable trade in services data are available. In Quarter 1 2018, these imports increased by £113 million, going from £3,151 million in Quarter 4 2017 to £3,264 million by Quarter 1 2018. This increase was mainly from greater imports from India in the transactions between related businesses not included elsewhere product group.

Comparing the latest estimates for trade in services (excluding travel, transport and banking) in Quarter 1 2018 with the same quarter a year ago reveals that imports were higher from four continents and lower from three. Among those that increased on this basis, the greatest difference was for imports from the EU, which were £560 million higher in Quarter 1 2018 compared with Quarter 1 2017. The second largest increase on this basis was for imports from Africa, which increased by £153 million. This indicates the imports from both continents may be following a broad upward trend since the start of 2017.

The greatest decrease in services imports were from the Central and South Americas. Imports from this continent fell by £316 million, going from £758 million in Quarter 1 2017 to £442 million in Quarter 1 2018. However, this was not the lowest quarterly value for imports from that region, which were £350 million in Quarter 2 2017. Another continent for which imports decreased on this basis was the North Americas. These imports were £148 million lower in Quarter 1 2018 compared with the same quarter of 2017. However, for the North Americas, this was the lowest value for services imports since the comparable series began in Quarter 1 2017, when imports worth £4,546 million were reported.

The same 10 countries had the greatest values of services imports (excluding travel, transport and banking) in both Quarter 1 (Jan to Mar) 2018 and Quarter 4 (Oct to Dec) 2017. Looking at individual countries shows that the UK consistently imports the largest value of services from the US, followed by Germany. Both countries have provided the largest and second-largest value of imports in every quarter since Quarter 1 2017. For the US, this was equivalent to 22.3% of total services imports in Quarter 1 2018 compared with 23.5% in the same quarter of 2017. By contrast, the proportion of imports from Germany has remained constant at 7.8% of all UK services imports in the first quarters of 2017 and 2018.

The UK imports a greater proportion of services (excluding travel transport and banking) from the top 10 countries by value than are accounted for by the 10 largest country export destinations. Close to two-thirds (65.5%) of all UK services imports in Quarter 1 (Jan to Mar) 2018 were to the 10 countries presented in Table 3. This compares with three-fifths (60.5%) for the respective 10 countries for UK services exports (shown in Table 2). Furthermore, these 10 countries accounted for a greater proportion of UK imports in the first quarter of 2018 compared with the same quarter of 2017, where imports were equivalent to 64.9% of all imports.

Detailed annual country, industry and product estimates for UK trade in services can be found in the International Trade in Services statistical bulletin published 31 January 2018, which contains annual estimates for periods up to 2016. Estimates for 2017 will be published on 31 January 2019.

Quarterly estimates for nine non-EU countries for total UK trade in services (including industries not captured by the ITIS survey) can be found in the UK Economic Accounts (Table B6B) published 29 March 2018, which contains quarterly estimates for periods up to Quarter 4 (Oct to Dec) 2017.

Detailed annual country-level estimates for total UK trade in services (including industries not captured by the ITIS survey) will be published in Pink Book 2018 on 31 July 2018, which will contain annual estimates for periods up to 2017.

The International Trade in Services (ITIS) Quality and Methodology information report contains important information regarding the methodology for producing annual ITIS statistics, specifically:

• the strengths and limitations of these data and how they compare with related data

• users and uses of these data

• how the output was created

• the quality of the output including the accuracy of these data

A review of the quarterly ITIS sampling methodology, undertaken between September and December 2016, concluded that the quarterly sample should be doubled to improve the coverage of data collection for 54 countries and broad industrial sections. The new sample design was adopted for the Quarter 1 (Jan to Mar) 2017 reference period. These data have since been compiled and have been released via this bulletin. This change reflects the wider trade transformation programme aimed at improving the quality, granularity and timeliness of trade statistics.

The ITIS survey collects data relating to the amounts spent on both the services imports and exports of UK businesses and collects geographical information regarding the destination of service exports or the source of service imports.

Types of transactions covered

Product

The ITIS survey collects the value of transactions between the UK and residents in other countries in respect of 52 services products. These data are made available in the annual ITIS publication.

Industry

The ITIS survey collects information regarding the industries of the UK businesses that have conducted international trade in services. The industries are identified using an economic classification that defines areas of the economy, known as the SIC (2007) classification, an internationally-consistent standard industrial classification. This provides a framework for the collection, tabulation, presentation and analysis of data about economic activities. Note that the following industries are not covered by the ITIS survey: travel; transport; banking and other financial institutions; higher education; charities; and most activities within the legal profession.

Geographical

The tables within this publication show the countries to which services are exported, and from which services are imported. The geographical groupings used in the tables are shown in Table 4.

The figures for the EU relate to the 27 other member states. Trade with EU Institutions is also included in the EU totals and excluded from the International Organisations totals.

Earnings from third country-trade, that is, from arranging the sale of goods between two countries other than the UK and where the goods never physically enter the UK are included. This activity is known as “merchanting”. Earnings from commodity trading are also included. As with merchanting, the service element is the profit or loss.

Types of transactions not covered

The purpose of the ITIS survey is to record international transactions that impact on the UK’s Balance of Payments, hence businesses are asked to exclude trade expenses such as the cost of services purchased and consumed abroad, from their earnings. Trade in services exports or imports that are invoiced for the export or import of goods are excluded as they are already counted in the estimates for trade in goods.

This bulletin analyses ITIS survey data for the most recent quarter based upon response data received up to eight weeks after the reference period. It also uses the previous quarter’s data containing information received up to 20 weeks after the reference period. Values for non-responding businesses have been estimated using the imputation methods outlined in the ITIS QMI document referenced above. ITIS data will be revised in each quarterly bulletin, as the response rate increases between weeks 8 and 20 in the survey round, leading to improved quality of the ITIS survey estimates.

The response rates targets for the quarterly ITIS survey are 77% at eight weeks after the reference period (used to produce first quarterly estimates in this release) and 85% at 20 weeks after the periods (revising earlier data points in the time series as they are added to this release in future).