“We have a huge trade deficit with the European Union”
Jacob Rees-Mogg MP, 16 March 2017
Another way of putting this is that the EU sells more to us than we sell to it. That’s correct.
But that doesn’t necessarily mean that “they need us more than we need them”, as it was often put during the referendum campaign. There are other ways to look at this.
For example, UK exports to those other EU countries are worth around 13% of the value of our economy, whereas for the EU it’s only 3-4%.
And while domestic producers might be happy, it wouldn’t necessarily be in the interests of consumers or businesses to make imports more expensive. We buy EU imports because we want them, not to do French wine producers or Irish beef farmers a favour.
The value of the trade deficit was about £60 billion in the 12 months to September 2016. The UK imported £302 billion worth of goods and services from the EU, and exported £242 billion worth, according to the Office for National Statistics. (Figures from the EU statistics agency are different but still show a deficit.)
That deficit is because of goods; we actually have a trade surplus with the rest of the EU in services.
The Question Time discussion was mostly concerned with tariffs (import taxes) on goods. But services are a far bigger part of the UK economy than goods, and tariffs aren’t considered the biggest issue in international trade these days.
“With the exception of a few sensitive products where tariffs remain high, it is non-tariff barriers that are the real impediment to international trade today”, as the Institute for Government puts it.