In this contribution to a question Lord Bilimoria discusses UK exports and notes the relationship with the EU that the UK’s exports have. He stresses that trade is about more than goods and services but also about the free movement of people. He concludes by stating that exports are crucial to the UK economy.
UK Exports
08 March 2017
Question for Short Debate asked by Viscount Waverley:
To ask Her Majesty’s Government what strategy they have adopted to increase the United Kingdom’s exports.
Lord Bilimoria:
My Lords, the Prime Minister said that, when it comes to Brexit,
“no deal is better than a bad deal”.
In 2015, before the European Union referendum, the UK recorded the largest current account deficit as a percentage of GDP among the G7 economies. Yet in 2015 UK exports grew faster than world exports for the first time since 2006.
When we talk about exports, we need to look at investment as well. About 45% of the UK’s investment abroad is in Europe, with around 35% of holdings in the Americas. Just over half of investment into the UK comes from Europe, while 33% comes from the Americas. The EU accounts for 45% of our exports and 53% of our imports. We have a trade deficit with the EU and a surplus with the rest of the world: 55% of our exports are non-EU. But overall, of course, we have a deficit as a country.
My own business, Cobra Beer, a joint venture with Molson Coors, exports to every European Union country, and we import from Belgium as well. More than £500 million-worth of beer was exported from the UK in 2016, making British beer the UK’s third most valuable food and drink export. But 63% of those exports go to the European Union, which is why the BBPA said:
“Continuing tariff-free access to our biggest market is essential as we leave the European Union”.
Recently, the European Union Committee produced a report titled Brexit: The Options for Trade. I thank the noble Viscount, Lord Waverley, for initiating this debate. In that report the committee said:
“While a FTA provides the greatest flexibility in securing a bespoke deal … we see no evidence that trade on terms equivalent to full membership of the Single Market … could be achieved. We do not think it will be possible to negotiate a comprehensive UK-EU FTA within two years”.
Does the Minister agree that this will be very difficult for us? The price of trading in the EU on World Trade Organization rules—the alternative to a deal on a new EU FTA—is giant: as high as £58 billion, according to the Institute for Fiscal Studies. Does the Minister agree with that?
To pursue an independent trade policy will be difficult, and yet UK trade as a share of GDP has been increasing continually since 1940. It is now 60%. The UK has always been a powerful advocate for free trade within the EU. If you look at exports of UK goods and services, the vast majority of the top 10 client countries are in the EU. We are also a very attractive inward investment destination—the third highest in the world. I ask the Minister: how is the new Department for International Trade different from UK Trade & Investment, with which I worked very closely as the founding chairman of the UK India Business Council?
We hear the rhetoric from the Secretary of State, Liam Fox, that we will lead the charge towards a world of open and fair trade, so let us rise to this challenge—a golden opportunity as never before. I have worked with the GREAT campaign. Will the Minister confirm that it is an excellent initiative? I have worked very closely with our high commissions and embassies around the world and they need to be applauded and our businesses need to use them much more than they do.
It is not about just goods and services. When it comes to trade, it is about movement of people. International students bring in £25 billion to the economy. They are important. Our immigration rules are important, hand in hand with our trade.
Finally, today we have had the Budget. To my knowledge there is not one mention of the word “exports”—but they are crucial to our economy.