International trade in UK nations, regions and cities: 2019

• In 2019, the South East of England led the UK total trade deficit, importing 20.1% (£101.1bn) of total UK goods; this was more than any other UK region.
• Scotland, Wales and Northern Ireland were all net exporters of both goods and services in 2019, while London, the North East and South West were the only English regions with a positive trade balance.
• Eight of the nine English regions and all three devolved nations were net exporters of services in 2019, with London accounting for £62.1 billion of the total UK trade in services surplus.
• Two of the English regions, along with Wales and Scotland, were net exporters of goods to EU countries in 2019, with Wales and six of the English regions being net importers of goods from non-EU countries.
• Scotland, Northern Ireland and three of the English regions were net exporters of services to the EU in 2019.
• The wholesale and motor trade industry contributed the most (£126.8 billion) to the trade in goods deficit and this was seen in all regions of the UK.
• The travel services industry accounted for the largest proportion of services imports, representing 28% of the UK total.

Trade in goods and services by English region and devolved nation

The UK had a total trade deficit of £27.6 billion in 2019, compared with £29.8 billion in 2018. The South East accounted for £33.7 billion of the deficit with London partly offsetting this with a surplus of £28.7 billion. Six of the nine English regions were in a trade deficit, while the devolved nations were all in a trade surplus (Table 1).

It is important to remember that the onward distribution of goods means that the initial point of entry and dispatch will not necessarily reflect its ultimate destination. For example, the South East houses the Folkestone and Dover ports and so we would expect that this area would have high goods imports and exports because companies have warehouses in these areas.

The UK was a net importer of goods in 2019 showing a deficit of £130.9 billion. This was also the case for seven of the nine English regions where the South East accounted for £51.2 billion of the goods deficit (Table 1). It is possible that we see a warehousing effect in the data for the South East as a large proportion of warehouse and distribution companies are based there.

The devolved nations were net exporters of goods. Scotland, Wales and Northern Ireland saw a goods surplus of £12.0 billion, £1.1 billion and £0.8 billion respectively.

In 2019, the UK was a net exporter of services with a surplus of £103.3 billion, compared with a surplus of £109.6 billion in 2018. This was the case for eight of the nine English regions (Table 1) where London accounted for £62.1 billion of the surplus followed by the South East, which accounted for £17.4 billion of the surplus. The three devolved nations also contributed to the services surplus but to a lesser extent.

Figure 1: The South East of England imported more goods than any other UK region and Scotland had the highest goods balance in 2019

Interactive map highlighting regional trade in goods balance at the International Territorial Level (ITL) 1, 2019

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Figure 2: London exported and imported more services than any other UK region followed by the South East of England

Interactive map highlighting regional trade in services balance at the International Territorial Level (ITL) 1, 2019

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Geographic and industry analysis of subnational trade in goods

The UK total trade in goods deficit was driven by imports to England. England was the only country in the UK in a trade in goods deficit (£135.4 billion) with seven of nine English International Territorial Level (ITL)1 regions reporting a trade in goods deficit. Of total UK goods imports, 20.1% went to the South East (£101.1 billion) with imports in the wholesale and motor trades industry contributing £61.7 billion (61.0%) of goods imports in this area and 12.3% of UK total goods imports in 2019. Of imports in the wholesale and motor trades industry, 66.4% in the South East were imported from the EU; this is 5.8 percentage points higher than the UK total imports in this industry.

At the ITL2 level, Berkshire, Buckinghamshire and Oxfordshire accounted for 43.4% (£43.8 billion) of imports to the South East of which 72.5% (£31.8 billion) is imported from the EU; the wholesale and motor trades industry accounted for £25.4 billion (79.9%) of this. The large value of imports in this region is likely driven by large economic hubs such as Milton Keynes, which accounted for 45.0% of EU imports to this region. This area serves as a central logistical hub for many UK and international businesses including a number of car manufacturers because of its central location and therefore, this may not reflect the final destination of the goods.

Wales was a net exporter of goods to the EU with a trade surplus of £5.6 billion. Almost all of this came from the manufacturing sector.

Scotland was a net exporter of goods to non-EU countries with a surplus of £11.9 billion. The main driver was Transportation, storage, accommodation and food service activities which contributed £9.1 billion to the surplus. Scotland is a notable producer of whisky, which could account for these levels. High levels of goods exports (£9.6billion) were seen in Eastern Scotland by the Other services industry (H-U) with 96% of this being exported to non-EU countries.

Outer London and Inner London, with a net balance of negative £18.7 billion and negative £14.7 billion respectively, were the city regions that contributed the most to the trade in goods deficit. Both deficits were driven by high imports but while Inner London imported more from non-EU countries, Outer London imported more from EU countries.

Figure 3: The South East and London represent the largest proportions of wholesale and motor trade imports in the UK accounting for 29.5% and 17.6% respectively

Percentage of wholesale and motor trade imports by International Territorial Level (ITL) 1 region, 2019

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The wholesale and motor trade industry contributed the largest amount to the UK total trade in goods deficit with a balance of negative £127 billion in 2019 with all areas of the UK aside from Unknown reporting a trade deficit. The deficit was driven by a large proportion of imports in this industry to the South East and London, which, when combined, contributed 47.1% (£98.4 billion) of UK total imports in this industry. With the exception of London and Wales, all areas imported more from EU than non-EU countries in this industry. All areas exported more goods in this industry to EU countries with London exporting the smallest proportion (50.2%) of goods to the EU.

Trade in the second largest goods industry, manufacturing, is far more geographically distributed across the UK.

Figure 4: The manufacturing industry in the West Midlands exported the largest proportion of goods region in 2019

Subnational goods exports by International Territorial Level (ITL) 2 region, 2019

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The manufacturing industry in the UK was a net exporter of goods with a balance of £42.7 billion in 2019. While the South East features heavily in the distribution of this industry’s trade across the UK, trade was less centred around the South East as was the case in the wholesale and motor trade industry.

The West Midlands contributed the largest amount to the surplus, exporting 13.8% of UK total for manufacturing in 2019 (£26.5 billion), the largest proportion of which (60.9%) was exported to non-EU countries. The areas in the West Midlands that export the most are Warwickshire County Council and Solihull, which exported £6.2 and £6.0 billion of goods respectively in 2019. These exports are likely related to large automotive and technical manufacturing facilities in this area.

The South East and Wales contributed the most to non-EU manufacturing imports at 14.8% and 13.5% of UK imports in this industry respectively. At a lower geographical level, the largest importer in the manufacturing industry was West Wales and the Valleys; this region imported £10.6 billion of goods in 2019, of which £8.3 billion was imported from non-EU countries. Non-EU imports of goods to this region accounted for 47.0% of all imports into Wales in this period.

Because of the high value of trade in wholesale and motor trade industry goods in the UK – accounting for 41.5% of UK total imports and 22.1% of UK total exports in 2019 – the total UK trade in goods largely represents trade with regions that contribute the largest proportion to that industry, such as the South East and London.

When excluding the wholesale and motor trade industry from the UK total, the remaining trade in goods deficit falls from £130.9 billion to just £4.1 billion. Examining trade in goods in other industries, such as manufacturing, reveals that trade in goods is far more distributed and diverse across the UK than the wholesale and motor trade industry.

Geographical and industry analysis of subnational trade in services

In 2019, the UK was a net exporter of services with a trade surplus of £103.3 billion compared with £109.6 billion in 2018. All three devolved nations and eight of nine English ITL1 regions contributed positively to the surplus. The East Midlands, with a net balance of negative £0.6 billion, was the only region to have a trade in services deficit. All city regions recorded a positive trade in services balance and contributed to 65.2% of service exports and 45.8% of service imports.

The largest proportion of service imports came through the travel services industry, representing 28% of the UK total service imports, up from 26% in 2018, and contributing at least one-quarter of imports in every ITL1 region except London where financial and insurance activities had the highest share of imports.

Of the UK’s travel imports, 91.3% (£54.5 billion) were related to personal trips, up from 88.9% (£46.1 billion) in 2018, with London being the region with the highest share of trips relating to business.

Spain features as a prominent trading partner, accounting for 7% of UK services imports, with over three-quarters of Spanish imports relating to the travel industry. London accounted for 23% (£2.5 billion) of travel imports from Spain, likely because of the presence of three of the largest airports in the UK.

Financial and insurance was the second biggest contributor to service imports, accounting for 19.6% (£41.8 billion) of the UK total in 2019, up from 18.7% (£36.9 billion) in 2018. This industry was the biggest contributor to exports for all ITL1 regions apart from the East and South East, where professional, scientific and technical activities dominated, and Northern Ireland where information and communication was the highest.

Manufacturing accounted for a relatively high share of service exports in the North East (21.2%, £1.3 billion) and Wales (24.3%, £1.6 billion) in 2019, compared with 13.7% (£0.9 billion) and 28.6% (£2.1 billion) respectively in 2018. The industries with the highest share of exports in London were financial and insurance activities (30.1%, £41.4 billion) and information and communication (24.1%, £33.1 billion).

Figure 5: Services trade with non-EU countries accounted for £85.5 billion (82.7%) of the trade in services surplus in 2019, of which London contributed £43.0 billion

Subnational service imports and exports by International Territorial Level (ITL) 1 region and destination, 2019

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The EU was the destination for 38.1% of the UK’s service exports, down from 41% in 2018, and the location of 48.2% of service imports, with France, Germany, the Netherlands and Republic of Ireland each accounting for between 4% and 7% of total imports and exports.

Northern Ireland is the only region to share a land border with the EU and has the highest share of both service exports and imports with the EU.

The North East has the second highest proportion of service exports with the EU with the Republic of Ireland accounting for 9.5% of exports and the Netherlands accounting for 9.4% compared with an average of 4.7% and 5.1% respectively for the UK as a whole.

London has the largest share of imports coming from outside the EU while Wales’s share of exports to non-EU countries was the highest.

Figure 6: Northern Ireland’s trade in services was proportionally highest to the EU for both imports and exports

Subnational service imports and exports by International Territorial Level (ITL) 1 region and destination, 2019

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Every UK region at the ITL1 level had a positive trade in services balance with non-EU countries as a whole. The United States was the largest trading partner accounting for 25.2% of all service exports and 20.0% of all service imports in 2019.

In Wales, which had the lowest proportion of trade with the EU, the United States was the destination for 33.7% of all service exports. The United States was also the destination for around 27% of exports in London, the North West and the East. The East has the highest share of exports to Singapore and China compared with other ITL1 regions.

Figure 7: London accounted for 45.0% (£41.4 billion) of UK exports within the financial and insurance activities industry (13.1% of UK total services exports)

Subnational exports of services from the financial and insurance activities industry by International Territorial Levels (ITLs) 1 and 2 regions, 2019

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Financial and insurance activities accounted for the highest share of service exports with 45.0% of exports in this industry attributed to London. This strong trend is likely magnified by the location of the head offices of many large financial institutions being located within London and 39.7% of UK employees undertaking financial and insurance activities do so in London.

The financial and insurance activities industry accounted for over a third of the UK's trade in services with the United States, with London accounting for 46.0% of all financial and insurance exports to the United States. Financial and insurance exports to the United States accounted for 15.1% of total exports from the Yorkshire and The Humber region and 14.3% of total exports from Wales.

In the East of England, professional, scientific and technical activities made up over half of all imports from the United States and around a third of exports to the United States. Exports in this industry to the United States, Switzerland and China made up 8.8%, 3.3% and 2.0% of all service exports from the East, driven by the Cambridgeshire area which accounted for 31.9% of exports to non-EU countries in the East.

Scotland both exports and imports a greater proportion of services to and from the Netherlands and Norway relative to all other ITL1 regions, driven by trade in North Eastern Scotland where 23.8% of exports and 33.3% of imports are traded with these two countries. In this ITL2 region, trade is concentrated in professional, scientific and technical activities as well as non-manufacturing.

For West Wales and the Valleys, China is a relatively important importing partner, in which 11.0% of service imports arrive from this location compared with an average of 1.7% for other ITL2 regions in the UK. Imports here are more driven by manufacturing trade compared with Wales as a whole.

City regions exported 37.0% of services to EU countries while importing 43.0% of non-travel services with the EU. Of all the city regions, Aberdeen has the lowest share of service trade with the EU, with 19.4% of exports and 35.2% of imports traded with the EU, reflecting the high share of trade Aberdeen has with Norway compared with other cities.

Tees Valley exports the highest proportion of services to the EU, driven by trade with the Netherlands, which receives 23.2% of its exports. Greater Manchester imports the highest proportion from the EU at 54.8%, driven by its imports from the Republic of Ireland.

Financial and insurance activities make up the highest proportion of service trade in 13 and 12 of the 16 city regions for exports and imports respectively. Real estate, professional, scientific and technical activities make up the highest share in Aberdeen at 40% of non-travel exports while in Cambridgeshire and Peterborough this industry accounts for over 50% of non-travel service exports.

The industry also makes up over 50.9% and over 71.5% of non-travel service imports to Aberdeen and Cambridgeshire and Peterborough respectively. Non-manufacturing industries are of relative importance in Aberdeen where the share of service trade in this industry is far greater than any other region; the same can be said for manufacturing in Cardiff.

ITL

The International Territorial Levels (ITL) is a hierarchical classification of administrative areas used for statistical purposes. ITL1 are major socio-economic regions, while ITL2 and ITL3 are progressively smaller regions. In the context of the UK, the ITL1 areas are Wales, Scotland, Northern Ireland and the nine regions of England.

Trade balance

The trade balance is the difference between exports and imports or exports minus imports. When the value of exports is greater than the value of imports, the trade balance is in surplus. When the value of imports is greater than the value of exports, the trade balance is in deficit. The balance is sometimes referred to as "net exports".

A full Glossary of economic terms is available.

Data sources and quality

This bulletin presents estimates of the value of imports and exports of goods and services in 2019 to and from subnational areas of the UK. It 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 goods and services together improve the coherence of outputs and allow for comparison of total trade flows. This bulletin implements the previously used methodological approach for calculating imports and exports of services as outlined in the preceding article International trade in services by subnational areas of the UK, 2018.

The goods data have been produced by taking estimates from the UK trade in goods by industry, country and commodity, exports and imports output and then assigning data to a region using Inter-Departmental Business Register (IDBR) data in conjunction with HM Revenue and Customs (HMRC) Value Added Tax (VAT) data. Further detail on linking and apportionment methods can be found in the Strengths and limitations section.

This bulletin is a new release. All figures presented 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.

Estimates from 2018 cited in this bulletin are consistent with UK National Accounts, The Blue Book 2019. The 2019 subnational estimates are consistent with UK National Accounts, The Blue Book 2020 and with other national accounts publications. Work to bring this data in line with Blue Book 2021 is planned for the next publication. It was not possible to bring this release in line with Blue Book 2021 data because it relies on UK trade in goods by industry, country and commodity, exports and imports for goods data and UK trade in services by industry, country and commodity for services data which is currently in line with Blue Book 2020.

Trade in goods data

The starting point for the trade in goods subnational dataset is the trade in goods by industry dataset. The trade in goods industry dataset is on a reporting unit basis, which has been produced by linking the HM Revenue and Customs (HMRC) microdata to the Inter-Departmental Business Register (IDBR).

To produce subnational estimates, the trade in goods industry dataset is linked to IDBR to apportion to local units, extracting their postcodes while maintaining the SIC of the reporting unit for consistency with the existing trade in goods by industry publication. The apportionment for this first experimental release uses the employment counts of local units, work to develop this method is planned for future releases.

There will be some HMRC records that cannot be linked to IDBR – these are allocated to the “unknown” subnational region.

Allocation of balance of payments (BoP) adjustments is the same as the trade in goods by industry dataset: BoP adjustments targeted to an industry take on the regional allocations of the HMRC data for that industry.

Primary and secondary suppression is applied to the datasets to protect the confidentiality of individual traders; suppression and disclosure becomes more complex where data are presented at a more granular level. Because this publication provides more granular breakdowns than previous releases, there will be an increased risk of disclosure and as such additional methods have been developed to mitigate against the risk of disclosure. Statistical Disclosure Control, in line with HMRC methods and those used in TiG Industry releases has been applied to the datasets.

UK trade statistics are prepared on the special trade basis. Under the special trade system, goods imported into customs warehouses and free zones are only recorded once they are removed and enter free circulation or certain customs procedures (for example, inward processing). Re-exports from customs warehouses and free zones are not recorded under the special trade system. Prior to this, UK trade statistics were compiled on a general trade basis.

In addition to this, it is important to note that some goods trade in this release will be to or from warehouses and distribution centres and do not reflect the ultimate destination of goods.

HMRC also publishes regional trade statistics (RTS). Just like their OTS figures, these are compiled on an International Merchandise Trade Statistics (IMTS) basis but the subnational trade figures produced by the Office for National Statistics (ONS) are on a balance of payments (BoP) basis. This means there are numerous different methodologies that contribute to the compilation of each set of statistics, but the main one is that RTS are compiled based on goods physically entering or leaving the UK, while the ONS subnational trade are produced on a change of economic ownership basis. Important to note that the RTS data excludes non-monetary gold.

Trade in services data

We use the International Trade in Services Survey (ITIS) alongside UK balance of payments information and apportion trade value to the level of the local unit of a business (such as a shop, warehouse or office) from the level of the reporting unit (the comprised entity from which data are collected, often a head office or administrative site).

Data sourced from the ITIS cover approximately half of import value and exclude information on products related to the travel, transport and banking sectors (finance and insurance). ITIS data, which are collected at the reporting unit level, are apportioned to local level using employment as a proxy for tradeable activity. A proportionate amount of value reported in the ITIS, calculated by dividing the number of employees in each local unit by the total number of employees in the whole reporting unit, is allocated to each local unit within the business. Once allocated in this way, value is then aggregated from each local unit to create totals for each geographic breakdown – ITL1, ITL2 , ITL3 and city region – and each industry breakdown. Data at the local authority level are not sufficiently robust and therefore ITL3 is the lowest level of geography at which we can currently estimate.

For imports not covered by the ITIS, and that are instead accounted for by other sources used in compiling the UK balance of payments, we use similar approaches. Analysis conducted at the national level provides estimates of trade from each industry not sourced from the ITIS. It is not possible to allocate this to specific businesses; therefore, it makes use of a proportionate mapping approach to convert values of imports from product categories into industries. More about this methodology can be found in the release UK trade in services by industry, country and commodity: 2016 to 2018, published 28 February 2020.

Financial trade is first broken down from the national level to ITL1 level using data sourced from the Bank of England on financial activity. Value is then broken down from ITL1 level to local level using employment figures from the Business Register and Employment Survey (BRES) as a proxy for trade-related business activity. The proportion of employment in financial industries in each local authority is applied to the values of financial imports in each ITL1 area to break results down from regional to local level.

Exports of services related to travel can be allocated to industries located in UK, as it is money spent by visitors to UK businesses. However, it is not possible to allocate travel imports to specific industries, as it is money spent by British people abroad at foreign businesses. This means that we must present travel-related services as a separate category apart from the standard industries.

Values for travel-related services are broken down to ITL1 level using the value of tourist spending abroad calculated by the International Passenger Survey (IPS). This is done separately for personal tourism and for business-related tourism. However, because of the limitations of the IPS, it is not possible to break values down to any smaller geographies, and there are no suitable proxy variables to use to achieve this. Imports related to travel account for 28% of the value of all imports, and this should be taken into careful consideration when interpreting the results presented.

For values of imports that are not sourced from the ITIS, not related to financial products and not related to travel, we use employment value from BRES to break down from a national level directly to local level for each remaining industry division.

Once service import values are allocated for each industry – including travel – and for each relevant subnational geography, estimates are then constrained to match the UK balance of payments. As a data adjustment technique, constraining forces breakdowns of values to match known totals, meaning that resultant outputs may no longer match their constituent component calculations. However, it means that subnational outputs will be consistent with UK-level figures for each combination of industry and country of origin.

Total trade and apportionment

Data for goods and services exist separately in the accompanying datasets but within the bulletin tables, we have created a total trade picture.

We currently use employment as a proxy variable, operating under the assumption that the size of a business and how many employees it has are likely related to the amount of trade the business conducts. This may not be the best assumption to use; work is continuing to further develop the approach.