Strong trade in services boosts UK exports

February 20, 2024

Responding to the latest trade data from the ONS, William Bain, Head of Trade Policy at the British Chambers of Commerce, said:   

“The UK had another good year for services exports in 2023, showing the strength of that side of our economy. But there will be concern about the drop in goods exports. 

“Further measures are needed to address this; more must be done to connect exporters and would-be exporters with customers in markets across Europe and the rest of the world.  

“The Government should set up an Exports Council to achieve this. It could work with business to build upon our relative strength in services exports across even more sectors, while providing fresh impetus to improve overseas sales of goods. 

“This would be a very welcome step as 2024 is already looking like will a challenging year for international trade. We are yet to see the full effects of Red Sea disruption and patchy global growth is only adding to the uncertainty.” 

 

The UK trade picture in detail 

The data for the whole of 2023 shows that the UK’s services trade continues to lead the way. Removing the effects of inflation, total annual UK exports in combined goods and services rose by 0.6% (£3.9bn) to £690.8bn in 2023.   

This was down to the UK’s robust trade in services which rose by 5.3% with strong performances in financial, business, professional, cultural and travel services exports across the world. 

 

But the flipside was a disappointing performance in goods exports, which fell by 4.6%.  

 

Imports 

UK goods imports in 2023 fell by 7.4% while services imports rose by 13.3% (excluding inflation). The picture for imports of services in the final quarter of the year was not as strong, however, as they fell by 0.5% (£0.4bn). Although for the final month of the year, services imports increased by £0.1bn. 

On goods imports in December, the ONS found no effects in the data of the Red Sea disruption. Goods imports volumes fell by 3.6% for the month, with rest of the world imports falling by 4.5% and EU imports down by 3% on November.  Again, the leading cause was fluctuations in oils and fuel trade but also with falls in machinery and transport goods (principally from China). 

 

Exports  

Services export volumes exceeded goods exports volumes by £62bn in 2023. After taking inflation into account, UK services exports are 4.7% higher than pre-2020 lockdown levels.   

Although the annual performance for UK services exports rose, the last quarter was negative, with an estimated drop in exports of 4.4% (£5.2bn).  

For the month of December, UK services exports were static after inflationary effects were removed.  Goods exports fell by 0.5% in December with a 3.2% fall in exports to the EU being partially offset by a rise in rest of the world exports by 2.1%. Fluctuations in trade in fuels were a leading cause, but there were also falls in machinery, chemicals and transport equipment.