John talks all things Brexit

Globally, services account for 67% of the economic output of developed countries and for 20% – 25% of international trade. Services is estimated to take up to 70% of the EU’s economic output.

In 2015, the UK was the second largest exporter of services in the world providing 7.1% of total global services exports – the USA is the leading provider at 15.6%.

Services account for 75% of the UK’s economic output and 44% of its international trade. Tradeable services continue to grow and are the fastest growing element of UK trade.

About 37% of UK service exports go to the EU compared to 48% for goods. The EU is the UK’s single largest market for services, worth 70% more than its nearest rival – the USA and are worth more than the total of the eight next biggest customers combined.

The UK has a surplus with the EU in services but not in goods. Overall UK service exports to the EU represent 4.8% of UK GDP. The UK is the largest provider of financial services to the EU at 25%.

Those financial services earn between €217 and €234 billion in revenue and between €68 and €76 billion in taxes. Despite that, the majority of services [72%] exported from the UK are not financial services. They are telecommunications, broadcasting, tourism and aviation as well as professional services such as law and accountancy.

In 2015, these exports had a total value of €62.9 billion compared to financial services worth €26 billion. Non-financial services are responsible for more exports than financial services and also provide more jobs.

For example, aircraft engine manufacturers such as Rolls Royce, often sell their engines at a loss. Profits are then made on the sale of services such as inspections, maintenance, spare parts and repairs and many of these contracts will last for decades. Providing these services requires freedom of movement for people to provide those services, often at short notice. It also needs mutual recognition of qualifications and standards.

As a third country, the EU cannot offer the same deal to UK as it had as a member. The UK is likely to find out the hard way that deeper liberalisation of services is much tougher to achieve than on tariffs and it is always easier to achieve it within a bloc than from outside it.