When analysing an economic trend such as levels of trade, it is not sufficient to compare data from one time period with data from a previous time period. Many variables –such as GDP and trade –usually grow over time. The relevant questions are (a) Did they beat inflation? and (b) How does the growth compare to that of similar countries?
To the untrained eye, it looked like the UK’s goods exports had recovered by summer 2022 from their 2021 downturn. However:
- This was an artefact of high inflation: adjusting for inflation shows the volume of UK goods exports still below pre-pandemic levels
- To the extent that there was a recovery –and it was in current market prices only –this trend now appears to have gone into reverse
- The growth in the UK’s goods exports has consistently lagged that of peer nations’ goods exports and continues to do so
- Therefore, the UK’s share of global goods exports is well below pre-pandemic levels and still falling
The years 2019-22 have contained repeated economic shocks including the Covid-19 pandemic and Putin’s War. International comparisons, with multiple peers over a significant period of time, are crucial to parse out UK-specific performance from the effect of global shocks.
At current market prices, the UK’s goods exports in pounds during the first half of 2022 were 7% ahead of the level from the first half of 2018 (the last “normal” year according to the Office for National Statistics (ONS)), while the EU’s and US’ were 21% and 22% ahead in euros and dollars respectively. In US dollars, the UK’s goods exports were 1% ahead, while other G7 countries’ goods exports were 14% ahead. The most recent internationally comparable data –on merchandise exports –suggest that the UK’s goods exports fell further back in the third quarter.
The UK is the only major economy whose GDP is below pre-pandemic levels. Constrained ability to export explains a large proportion of this underperformance, which began in 2015/16 rather than, as the Left claims, tracking the time period of all recent Conservativegovernments.