UK exports of services have grown 9 times faster than goods since 2010

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UK services export volumes have risen nine times faster than goods since 2010, according to official data, further underlining the economy’s shift away from manufacturing, which some economists said was accelerated by Brexit.

Figures published by the Office for National Statistics on Monday showed a 63 per cent real terms growth in the export of services in the 14 years to the end of 2023, compared with just a 7 per cent rise for goods.

“Trends in UK trade have been a long-run shift from goods exports to services exports, as competition from both the EU and other manufacturing centres has pushed UK comparative advantage towards services,” said John Springford, of the Centre for European Reform think-tank. “Brexit has accelerated that shift.”

The latest data shows that although services exports have recovered strongly since the pandemic, goods export volumes have not and were in fact still below 2013 levels.

The ONS figures “confirm the long-term trends of the UK’s structural strength in service exports, and structural weakness in goods trade, with the latter exacerbated by Brexit”, said Jonathan Portes, professor of economics and public policy at King’s College London.

“While the UK’s reliance on EU trade has diminished somewhat, the EU remains by far our largest and most important trading partner, and that won’t change for the foreseeable future,” he added.

The ONS data showed that UK goods exports to non-EU countries grew at a faster pace than those to the bloc between 2010 and 2018 but have been volatile overall since then. Although the Brexit vote was in mid-2016, the UK left the EU single market at the start of 2021, just under a year after the pandemic hit.

Emily Fry, senior economist at the Resolution Foundation think-tank, said: “Britain has become a less open economy in recent years, and as a result has failed to benefit from the global post-pandemic goods trade boom. The probable culprit for this is Brexit,” she added.

Fry added that the UK’s performance in goods trade over the past five years was the weakest in the G7.

In contrast, services exports surpassed their pre-pandemic peak in late 2021 and grew in the years after, ONS data showed.

The growth in services exports to EU and non-EU countries was similar before the pandemic, with exports to both rising by about 40 per cent between 2010 and 2018. EU service exports were hit harder than to non-EU countries by the pandemic, although the recovery since has followed a similar pattern.

According to separate UN trade data from 2022, the UK has consolidated its position as the world’s second-largest services exporter after the US, accounting for about 7 per cent of global services exports. Services exports accounted for about 16 per cent of the UK economy, compared with 3.6 per cent for the US.

Fry, however, said the ONS data showed a slowdown in services export growth since mid-2023, adding: “Whether that was a bump or a worrying turn, remains to be seen.”