Chart of the month - Re-focus on UK services
In February 2017 the UK’s Office of National Statistics issued a warning about the UK’s fabled trade surplus in services. The ONS stated that it had been looking at pullicly available data, most notably available from the United Nations, provided different data on trade in services to that calculated by the UK government. It argued that the data from other countries, suggested that the size of the UK’s surplus may be considerably smaller than has been assumed to this date.
The ONS has a point. If you look at publicly available international data, it does seem that the data is inconsistent. Germany, for example, says it exports twice the level of financial services to the UK than the UK says it imports from Germany.
The only way round this problem is to reverse the flows and take an average which, using AI techniques, is weighted in favour of the better reporting country historically. This still produces surpluses with the world in business and financial services (Figure 1). However, the UK has deficits in all other service sectors except pensions. At an individual country level, the UK has a deficit in financial services with Germany.