UK trade: December 2020

Total value of UK exports and imports of goods and services in current prices, chained volume measures and implied deflators.

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12 February 2021 16:10

There has been a minor error identified with the rounding process for a number of monthly total trade series in 2020. This has resulted in rounding discrepancies of about £1m when the annual figure are compared with the 12 month aggregate, and similarly when the quarterly figure are compared with the 3 month aggregate. The series affected are:

IKBH, IKBI, IKBK, IKBL, IKBM, CPLX, CPLY, CTVP, CTVQ, FSA2, FSA3, FSIJ, FSIG.

This does not impact any of the key points and messages in this release or any other data series.

This has now been corrected.

We apologise for any inconvenience this may have caused.

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Contact:
Email Abi Casey

Release date:
12 February 2021

Next release:
12 March 2021

1. Main points

  • The total trade deficit for December 2020, excluding non-monetary gold and other precious metals, widened by £0.3 billion to £5.6 billion; imports increased by £0.8 billion and exports increased by £0.4 billion.

  • In Quarter 4 (Oct to Dec) 2020, the UK total trade deficit, excluding non-monetary gold and other precious metals, widened by £10.9 billion to £14.3 billion, driven by a widening of the trade in goods deficit.

  • Increasing goods imports were driven by machinery and transport equipment, chemicals and miscellaneous manufactures in Quarter 4 2020; medicinal and pharmaceutical products and car parts were stockpiled in preparation for EU exit.

  • Removing the effect of inflation, the total trade deficit, excluding unspecified goods, widened by £0.5 billion to £6.0 billion in December 2020, as import volumes increased by £0.6 billion and export volumes increased by £0.1 billion.

  • In 2020, the total trade deficit, excluding non-monetary gold and other precious metals, narrowed by £11.3 billion to £15.0 billion.

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UK trade data within our monthly trade bulletin are published at around a six-week lag because of the timeliness of source data. For example, the February 2021 publication will include data up to the end of December 2020. Therefore, all data contained within this publication refer to trade carried out while still within the EU exit transition period.

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3. The total trade deficit, excluding precious metals, widened in Quarter 4 2020

The total trade deficit, excluding non-monetary gold and other precious metals, widened by £10.9 billion to £14.3 billion in Quarter 4 (Oct to Dec) 2020 (Figure 1). The widening of the total trade deficit was because imports increased by £11.6 billion, while exports increased by £0.7 billion.

The increase in goods imports was driven mostly by increases in the import of machinery and transport equipment, chemicals, and miscellaneous manufactures. The increase in goods exports was driven mostly by increases in machinery and transport equipment, and chemicals (Figure 3).

More about economy, business and jobs

Imports of chemicals increased by £2.9 billion (22.7%) in the three months to December 2020, largely from an increase of £1.6 billion in imports of medicinal and pharmaceutical products from the EU. Companies were encouraged to make stockpiling of medical supplies a key part of contingency plans in preparation for Brexit and stockpile to a target level of six weeks' total stock. Additionally, other chemicals including the components used in making vaccines and COVID testing kits increased in Quarter 4 2020. The main source for increasing imports of other chemicals was Belgium, home to the Puurs site of pharmaceutical company Pfizer, one of the main producers of COVID-19 vaccines. The UK had received 22 deliveries of the Pfizer and BioNTech vaccine by 25 December.

Imports of machinery and transport equipment increased by £5.3 billion (14.0%) in Quarter 4 2020, while exports of machinery and transport equipment increased by a lesser £1.8 billion. Increasing imports of machinery and transport equipment were driven by a £1.5 billion (19.7%) increase in cars from the EU in Quarter 4 2020. Monthly imports of road vehicles have recovered from the COVID-19 pandemic and are now the highest since May 2019. This could be because of stockpiling of car parts in preparation for EU exit as well as use in production. This aligns with the ONS Index of Production, which saw car production increasing in December.

The trade in services surplus narrowed by £2.6 billion to £24.9 billion in Quarter 4 2020, as exports fell by £5.0 billion and imports fell by a lesser £2.4 billion. The falls were driven by falls in other business services, intellectual property, and travel services.

Imports of precious metals increased by £2.7 billion in Quarter 4 2020, while exports remained flat. Including precious metals, the total trade deficit widened by £13.6 billion to £17.5 billion in Quarter 4 2020.

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4. The trade in goods deficit, excluding precious metals, widened with EU and non-EU countries in Quarter 4 2020

The trade in goods deficit with EU countries, excluding non-monetary gold and other precious metals, widened by £4.2 billion to £25.6 billion in Quarter 4 (Oct to Dec) 2020. With non-EU countries, the trade in goods deficit widened by £4.1 billion to £13.6 billion (Figure 4).

The widening of the trade in goods deficit with EU countries, excluding precious metals, was because of a £8.1 billion (14.1%) increase in goods imports, while goods exports grew by a lesser £3.9 billion (10.9%). Increasing goods imports from EU countries were largely seen in machinery and transport equipment, and chemicals. Rising exports to EU countries were also seen in chemicals, and machinery and transport equipment.

The widening of the underlying trade in goods deficit with non-EU countries was because of an increase of £5.9 billion (12.1%) in goods imports, while goods exports increased by a lesser £1.8 billion (4.5%). Rising imports from non-EU countries were largely seen in machinery and transport equipment, and fuels. Increases in exports to non-EU countries were largely seen in miscellaneous manufactures.

Figure 4: The widening of the trade in goods deficit was driven by increasing imports from EU countries in quarter 4 2020

EU and non-EU goods exports and imports, excluding non-monetary gold and other precious metals, with EU and non-EU countries, quarter 4 2018 to quarter 4 2020

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5. Removing the effect of inflation, the total trade deficit, excluding unspecified goods, widened in Quarter 4 2020

This section presents volume and price estimates of UK trade exports, imports and balances, using chained volume measures (CVMs) and implied deflators (IDEFs). For more details on these terms, see Section 10 of this release.

In volume terms, the total trade balance (goods and services), excluding unspecified goods (which includes non-monetary gold), decreased to a £15.6 billion deficit in Quarter 4 (Oct to Dec) 2020, as imports increased by £10.9 billion and exports decreased by £0.1 billion (Table 2, Figure 5).

Total trade import prices increased by 1.0% in Quarter 4 2020, while export prices increased by 0.4%.

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6. Explore UK trade in goods country-by-commodity data for 2020 with our interactive tools

Explore the 2020 trade in goods data using our interactive tools. Our data breaks down UK trade in goods with 234 countries by 125 commodities.

Use our map to get a better understanding of what goods the UK traded with a country. Select a country by hovering over it or using the drop-down menu.

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Notes:

  1. For more information about our methods and how we compile these statistics, please see Trade in goods, country-by-commodity experimental data: 2011 to 2016. Users should note that the data published alongside this release are official statistics and no longer experimental.

  2. These data are our best estimate of these bilateral UK trade flows. Users should note that alternative estimates are available, in some cases, through the statistical agencies for bilateral countries or through central databases such as UN Comtrade.

  3. Interactive maps denote country boundaries in accordance with statistical classifications set out within Appendix 4 of the Balance of Payments (BoP) Vademecum (PDF, 1.1MB).

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You can also explore the 2020 trade in goods data by commodity, for example, car exports to the EU and UK tea or coffee imports.

Select a commodity from the drop-down menu or click through the levels to explore the data.

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Notes:

  1. For more information about our methods and how we compile these statistics, please see Trade in goods, country-by-commodity experimental data: 2011 to 2016. Users should note that the data published alongside this release are no longer experimental.

  2. These data are our best estimate of these bilateral UK trade flows. Users should note that alternative estimates are available, in some cases, via the statistical agencies for bilateral countries or through central databases such as UN Comtrade.

  3. Interactive maps denote country boundaries in accordance with statistical classifications set out within Appendix 4 of the Balance of Payments (BoP) Vademecum (PDF, 1.1MB).

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7. The total trade deficit, excluding precious metals, narrowed in 2020

The total trade deficit, excluding non-monetary gold and other precious metals, narrowed by £11.3 billion in 2020, as imports fell by £125.3 billion while exports fell by a lesser £114.0 billion (Table 3).

The narrowing of the underlying total trade deficit in 2020 was largely because of an £8.2 billion narrowing of the trade in goods deficit (Table 3). Imports of goods decreased by £66.1 billion, while exports decreased by a lesser £57.9 billion, largely because of falls in machinery and transport equipment, and fuels.

The narrowing of the underlying trade in goods deficit in 2020 was mainly because of a £15.4 billion narrowing of the deficit with EU countries to £82.5 billion, while the deficit with non-EU countries narrowed by £7.2 billion to £38.9 billion.

The trade in services surplus increased by £3.1 billion in 2020, as imports fell by £59.2 billion and exports fell by a lesser £56.1 billion.

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8. Revisions

The revision policy for this release has changed to align with the rest of ONS's National Accounts. In accordance with the National Accounts Revisions Policy, the data in this release have been revised with updated data for January 2020 to November 2020 to align with GDP first quarterly estimate: October to December 2020 published 12 February. New and improved data sources for trade and other aspects of GDP result in previous balancing adjustments being removed and new ones applied. This includes the following balancing adjustments:

UK trade balancing adjustments for chained volume measures are the same as for current prices. For more information on balancing adjustments, see the GDP bulletin.

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9. UK trade data

UK trade: goods and services publication tables
Dataset | Released 12 February 2021
Monthly data on the UK’s trade in goods and services, including trade inside and outside the EU.

UK trade time series
Dataset MRET | Released 12 February 2021
Monthly value of UK exports and imports of goods and services by current price, chained volume measures (CVMs) and implied deflators (IDEFs).

Other related trade data
Released 12 February 2021
Other UK trade data related to this publication. These include trade in goods for all countries with the UK, monthly export and import country-by-commodity trade in goods data, and revisions triangles for monthly trade data.

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10. Glossary

Trade balance

The trade balance is the difference between exports and imports or exports minus imports. When the value of exports is greater than the value of imports, the trade balance is in surplus. When the value of imports is greater than the value of exports, the trade balance is in deficit. The balance is sometimes referred to as “net exports”.

Inflation

Inflation is the change in the average price level of goods and services over a period of time.

Chained volume measures (CVMs)

A CVM is a “real” measure in that it has had the effect of inflation removed to measure the change in volume between consecutive periods, fixing the prices of goods and services in one period (the base year).

Implied deflators (IDEFs)

An IDEF shows the implied change in average prices for the respective components of the trade balance, for example, the IDEF for imports will show the average price movement for imports.

Precious metals and non-monetary gold

Precious metals include non-monetary gold, silver, platinum and palladium, and it forms part of the commodity group “unspecified goods”. Non-monetary gold comprises the majority of this group and is the technical term for gold bullion not owned by central banks.

A full Glossary of economic terms is available.

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11. Measuring the data

Coronavirus data impacts

Considering the challenges with data collection from social distancing measures put in place because of coronavirus (COVID-19), we have experienced challenges around the level of survey and data returns for this trade release.

International Trade in Services (ITIS) Survey

Data from the ITIS survey make up over 50% of trade in services data. This release incorporates data collected from the quarterly ITIS survey, which is sent to around 2,200 businesses. As a result of the coronavirus, many businesses have moved to a working from home arrangement or suspended trade, causing a lower response to the survey than usual.

In order to maintain the quality of the survey, we have developed improved imputation methods where we do not have actual data. We have utilised information from other surveys alongside expert guidance to implement these methods and quality assure the data. We continue to review and refine these methods, along with the associated survey methods, to ensure the data are as robust as possible. Alongside this, ITIS data collection has now been moved to online methods, enabling businesses to respond to the survey using spreadsheets, rather than paper, which can then be emailed back to us.

International Passenger Survey

Data from the International Passenger Survey (IPS) are the main source for travel services, making up around 8% of total trade. The IPS was suspended from 16 March 2020 because of the coronavirus (COVID-19) pandemic. We have been investigating alternative ways to continue to measure these services in the future.

We have worked with the ONS Data Science Campus to create new estimates using alternative data sources. The data sources that have been used include the Civil Aviation Authority, Eurotunnel, the Consumer Prices Index including owner occupiers' housing costs (CPIH), airline stock figures and aggregated and anonymised foreign-issued card spend processed through Barclays Point-of-Sale (POS) and "card-not present" channels.

We will continue to develop these estimates over the coming months and any improvements may result in larger than usual revisions for travel services.

UK trade data

Unless otherwise specified, data within this bulletin are in current prices (CPs). This means they have not been adjusted to remove the effects of inflation.

End of EU exit transition period

As the transition period ends and the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

Additionally, the Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes GDP) statistics to remain in line with those of other EU countries until EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards until at least 2024.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available early this year.

HMRC data

Data from HM Revenue and Customs (HMRC) are the main data source for trade in goods making up over 90% of trade in goods value. The ONS is working closely with HMRC to prepare for the change in collection of customs data which occurred at the end of the transition period. In order to maintain the quality of the data, we are continuing to work with HMRC to ensure our processes are robust and we only reflect changes in the economic trends. These data sources remain unchanged in this publication as trade conducted in December 2020 was within the transition period.

Precious metals

In line with international standards, the ONS's headline trade statistics contain the UK's exports and imports of non-monetary gold.

Because a significant amount of the world's trade in non-monetary gold takes place on the London markets, this trade can have a large impact on the size of and change in the UK's headline trade figures. We present time series data for precious metals as well as total trade excluding this commodity, which may provide a better guide to the emerging trade picture. This includes precious metals and trade excluding precious metals by EU and non-EU countries.

Data on non-monetary gold and other precious metals are obtained from the Bank of England (BoE), who provide a balanced figure (exports less imports). We attribute the balanced data to either exports or imports, depending on whether the data are positive (that is, exports are greater than imports) or negative (that is, exports are less than imports) respectively. Once received from the BoE, the ONS smooths the precious metals data to ensure individual responses cannot be disclosed.

More information about the ONS's recording of non-monetary gold is available.

Methodology

Trade is measured through both exports and imports of goods and services. Data are supplied by over 30 sources including several administrative sources, with HMRC being the largest for trade in goods.

Detailed methodological notes are published in the UK Balance of Payments Pink Book: 2020

The UK trade methodology web pages have been developed to provide detailed information about the methods used to produce UK trade statistics.

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the UK trade QMI.

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12. Strengths and limitations

National Statistics designation status

The UK Statistics Authority suspended the National Statistics designation of UK trade on 14 December 2014. We have now responded to all of the specific requirements of the reassessment of UK trade and, as part of our engagement with the Office for Statistics Regulation team, we are sharing our continuous improvement and development plans to support UK trade statistics regaining National Statistics status. We welcome feedback on our new trade statistics, developments and future plans. If you have any comments, please email them to trade@ons.gov.uk.

We are undertaking a programme of improvements to UK trade statistics in line with the UK trade development plan, including more detail and improvements now published to address anticipated future demands.

Trade asymmetries

These data are our best estimates of bilateral UK trade flows, compiled following internationally agreed standards and using a wide range of robust data sources. However, in some cases, alternative estimates of bilateral trade flows are available from the statistical agencies for the relevant countries or through central databases such as UN Comtrade. Differences between estimates are known as trade asymmetries and are a known aspect of international trade statistics, affecting bilateral estimates across the globe, not just in the UK.

We are heavily engaged in analysis of these asymmetries, developing strong bilateral relationships with other countries to understand, explain and potentially reduce them. We have published a series of analyses showing comparisons and the relative strengths of different estimates, which users may wish to reference to help them better understand the quality of our bilateral trade estimates.

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Contact details for this Statistical bulletin

Abi Casey
trade@ons.gov.uk
Telephone: +44 (0)1633 455121