Two of the biggest Brexit-voting regions would be hit hardest by a potential fall in services exports upon leaving the EU, new analysis suggests.
While London is by far the biggest exporter of services, a report today shows that the North East and West Midlands are the most reliant on the European market, sending around half of their services exports to the EU.
The new ‘heat map’ by Dr Ingo Borchert and Nicolo Tamberi from the UK Trade Policy Observatory (UKTPO) at the University of Sussex is the first to describe the rich pattern of UK regional services exports – and how reliant different regions and sectors are on the EU.
As well as regional differences, there are significant variations by sector. Services exports from the motor trade sector are primarily oriented towards the EU, for example, whereas professional services are exported mostly to non-EU destinations.
The research also provides the closest estimate yet of the value of Britain’s ‘hidden’ services exports – around £50 billion a year is generated by services inputs into manufacturing goods, which are subsequently destined for export.
The discussion around Brexit’s potential impact tends to focus on goods trade, even though international trade in services is more important for the UK economy than for most other countries, the researchers say.