Official data released on Wednesday by the Office for National Statistics show that UK services exports to the EU increased by more than to the rest of the world in the past two years.
In the first three quarters of 2018, compared with the same period in 2016, UK services exports to the EU rose by 14 per cent, a faster pace than the 8.8 per cent growth to non-EU countries.
That means that the EU, which accounted for 41 per cent of services exports in the first three quarters of 2018, has become even more important. They were 88 per cent bigger than the UK’s second market, the US.
Yet, “the lack of attention to services in the Brexit negotiations is striking”, said Simon Tilford, economist at Chatham House, a London think-tank.
Services include everything from retail and hotels to IT, finance and real estate. They have driven 60 per cent of the rise in UK exports during the past 20 years and they account for 45 per cent of total UK exports in 2017, up from 30 per cent in 2000.
With Brexit, UK services exports to the EU “will suffer a big hit, there is no doubt about that” said Mr Tilford. The EU created an integrated regulatory regime for services that reduces barriers to providing services across the countries in the union.
“The single market for services — whilst being incomplete — has benefited UK services exporters a great deal,” said Ingo Borchert, senior economics lecturer at the University of Sussex.
Alternative deals currently under discussion barely include services. The World Trade Organization has not succeeded in opening services markets and Ceta, the deal between Canada and EU, includes restrictions in trade in sectors covering almost 70 per cent of the UK’s services exports. [...]
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