It sounds like a simple question, but it’s not so easy to answer. We don’t have any official figures for how many UK businesses in total export to the EU. Instead we have various sets of figures, which each count different businesses.
Depending on which you use, probably between around 5% and 8% of businesses export to the EU. “Indicative estimates” published by the government could justify a figure of up to around 11%, if you’re willing to make enough assumptions.
These numbers don’t tell us about the value of trade with the rest of the EU to the UK, which we’ve covered here.
5%: VAT-registered business to business trade only
Vote Leave has claimed that 6% of businesses export to the EU. It says that’s an update of analysis by Business for Britain, which estimated that up to 5% of UK companies exported to the EU in the period 2006-2012. We asked Vote Leave for more details of the updated figures, but haven’t heard back.
Newer data for 2014/15 sent to us by HMRC suggests the figure—based on this particular method—is still about 5%.
That’s based on its estimate that 110,400 VAT-registered businesses exported to their peers in the EU in that year. This data isn’t public.
Business for Britain’s figures are calculated from sales lists that VAT-registered companies have to submit to HM Revenue and Customs for goods or services supplied to VAT-registered businesses in the EU.
This won’t count all businesses exporting to the EU, but Business for Britain argues this data would account for the majority of exporters, as large companies—which will be VAT registered—are the most likely to export.
Nobody really knows how many non-VAT registered businesses export. The government has attempted to estimate how many might, but these estimates are based on certain assumptions as we explain below.
But it’s not just non-VAT registered businesses in the UK that this figure excludes. It also only counts trade with other VAT registered businesses abroad. That means VAT or non-VAT registered businesses selling only to consumers in other EU countries won’t be counted.
So that’ll exclude people selling services online—like apps, games, and knitting patterns—to other individuals elsewhere in the EU, for example.
8%: all businesses exporting, based on assumptions
The government recently produced “indicative” estimates relating specifically to small and medium sized businesses (SMEs), estimating that 8% of all UK SMEs export to the EU, and a further 15% are in the supply chains of other businesses that export to the EU.
You might have heard this as 1.2 million businesses—that’s the Stronger In campaign adding together the 8% with the 15%, to reach 23%, and taking that as a proportion of the 5.4 million SMEs in the UK.
It didn’t make an estimate for how many large businesses export to other EU countries, but this wouldn’t make a difference to the percentage. As a maximum, if you assume all 7,000 large businesses (businesses with 250 or more employees) export to other EU countries, the proportion of businesses which export directly would still be 8%.
To reach this 8% figure, the department had to gather together what data there is on businesses exporting, and make assumptions about the types of businesses not included in that data. This includes non-VAT registered businesses, businesses in certain sectors such as finance, and businesses in Northern Ireland.
This 8% estimate assumes that these businesses behave in the same way as other small businesses, and that businesses in Northern Ireland behave in the same way as other UK firms.
There wasn’t any data on how many businesses exporting services export specifically to the rest of the EU. This estimate assumes that these businesses act in the same way as goods exporters.
The same analysis does suggest the figure could be up to 11%. That’s based on another set of data which suggests that around 13% of SMEs export globally.
If you agree with the government’s assumption that around 82% of exporters trade with the rest of the EU and apply that to this data, that would suggest that around 11% of SMEs export to the EU. That stays at the same proportion if you add in all large businesses.
9%, or 200,000 businesses: businesses exporting and importing goods, not services
Another, separate, figure you might have heard used by the Stronger In campaign is that over 200,000 UK businesses trade with the EU.
That refers to businesses both importing or exporting to the EU.
It’s based on an estimate made by HMRC in 2012 which said that almost 200,000 VAT-registered traders in the UK were importers or exporters of goods to other EU member states.
It said that the number “may be significantly higher” once businesses trading in services were added, but didn’t have data on this.
With Brexit fast approaching, reliable information is crucial.
If you’re here, you probably care about honesty. You’d like to see our politicians get their facts straight, back up what they say with evidence, and correct their mistakes. You know that reliable information matters.
There isn’t long to go until our scheduled departure from the EU and the House of Commons is divided. We need someone exactly like you to help us call out those who mislead the public—whatever their office, party, or stance on Brexit.
Will you take a stand for honesty in politics?