International trade in services, UK: 2015

• Total UK exports of services (excluding travel, transport and banking) in current prices continued to rise in 2015, increasing from £119,703 million in 2014 to £123,231 million, an increase of 2.9%.

• Total UK exports of services to Asia saw the largest increase in 2015, rising from £19,703 million in 2014 to £21,452 million, an increase of 8.9%.

• The professional, scientific and technical industrial grouping witnessed the largest increase in UK exports in 2015, rising by £2,260 million to a total of £35,760 million.

• Total UK imports of services (excluding travel, transport and banking) in current prices rose by 7.4% in 2015, increasing from £54,455 million in 2014 to £58,508 million.

• Total UK imports of services from Europe experienced the largest increase in 2015, rising from £29,085 million in 2014 to £31,483 million, an increase of 8.2%.

• The information and communication industrial grouping continued to be the largest industry responsible for UK service imports in 2015.

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform your work. For further information please contact us via email: itis@ons.gov.uk or telephone Sami Hamroush on +44 (0)1633 455087.

The 2015 International Trade in Services (ITIS) publication provides a detailed breakdown of annual trade in services estimates, analysing data by country, product and industry. These data are sourced from our International Trade in Services survey.

The ITIS survey is the main source of UK trade data although it is important to note that the survey does not cover the whole of the UK economy. The travel, transport and banking sectors of the economy are not covered by the ITIS survey, as these data are obtained from other sources such as the International Passenger Survey and the Bank of England. Estimates for the overall level of trade in services, including these industries, are published in our annual Pink Book and monthly UK trade publications. Based on the 2015 estimates, the ITIS data contributed approximately 55% and 43% respectively to the total trade in services export and import estimates for the whole of the UK.

Figure 1: Percentage contribution of International trade in services (ITIS) survey to total Trade in Services, 2015

UK

Source: Office for National Statistics

Download this image Figure 1: Percentage contribution of International trade in services (ITIS) survey to total Trade in Services, 2015

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Total exports of services (excluding travel, transport and banking) from the UK continued to follow an upward trend and increased from £119,703 million in 2014, to £123,231 million in 2015.

The rate of growth of UK service exports in 2015 increased marginally compared with 2014, from 2.1 percentage points to 2.9%.

Total imports of services (excluding travel, transport and banking) to the UK also followed an upward trend in 2015, rising from £54,455 million in 2014 to £58,508 million.

The rate of growth in UK service imports increased in 2015 to 7.4%, up from 2.0% in 2014.

The ITIS estimates show that in 2015, the UK continued to be a net exporter of services meaning more services were exported from the UK than imported. The UK trade balance stood at £64,722 million in 2015 and signifies the first year that the ITIS trade balance has shown an annual decline. This was caused by growth in UK service imports exceeding that of exports.

This section presents geographical findings for total UK international trade in services (excluding travel, transport and banking).

For more detailed geographic information relating to total exports and imports of services please refer to the ITIS dataset Table AO – Total trade in services (excluding travel, transport and banking) analysed by continents and countries.

UK exports of services

Europe remained the largest destination for UK exports of services and continued to follow an upward trend in 2015, rising from £58,711 million in 2014 to £59,518 million. Germany surpassed the Netherlands in 2015 to become the main trading partner for the UK within Europe, with UK service exports to Germany increasing from £7,171 million in 2014 to £7,276 million. The Irish Republic was the second largest destination for overall UK service exports to Europe, having risen from £6,598 million in 2014 to £7,188 million. With the exception of 2014, UK exports to the Irish Republic have been increasing annually since 2010. Despite both Switzerland and the Netherlands experiencing declines in 2015, both countries were the third and fourth largest destinations for UK service exports to Europe, with exports of £6,863 million and £6,854 million respectively.

The Americas remained the second largest destination for UK exports of services in 2015 and continued the upward trend seen in recent years with a further increase in 2015, from £33,523 million in 2014 to £34,053 million. The USA was the largest destination for UK exports to the Americas , with exports of £27,991 million in 2015.

Asia remained the third largest destination for UK exports of services in 2015, which increased from £19,703 million in 2014 to £21,452 million. The rest of Asia and Saudi Arabia were the main destinations for UK exports of services in 2015, recording £4,634 million and £4,613 million respectively.

UK imports of services

Europe remained the main source for UK imports of services in 2015 and increased from £29,085 million in 2014 to £31,483 million in 2015. Switzerland made the largest contribution to the increase between 2014 and 2015, rising by £812 million to a total UK imports figure of £2,603 million in 2015. Despite UK service imports from Germany experiencing a small decline in 2015, Germany remained the largest source of UK service imports from Europe, with a total of £4,910 million. The Irish Republic and France were the second and third largest sources, with imports of £3,791 million and £3,568 million respectively.

UK imports of services from the Americas continued to follow an upward trend in 2015 and increased from £14,863 million in 2014 to £15,413 million in 2015. Within the Americas, the USA was the largest source of UK imports , which increased from £12,945 million in 2014 to £13,880 million.

Asia remained the third largest area from which UK imports of services originated, with imports primarily being sourced from India and Japan.

This section presents UK trade in services estimates by broad product types and provides an overview of the changes in the value of exports and imports for these types of services by continent between 2014 and 2015.

The International Trade in Services (ITIS) statistical bulletin provides geographical breakdowns for 3 broad services product types: technical, trade related, operational leasing and other business services; professional, management consulting and research and development (R&D) services; and merchanting, other trade-related and services between related enterprises. The proportions each of these product types contributed to the total UK exports and imports of services in 2015 are presented in T able 1.

Technical, Trade related, operational leasing and other business services product group

Table 2 presents the service products used to compile the technical, trade related, operational leasing and other business services group up to 2012 and from 2013 onwards. Implementing the latest BPM6 recommendations resulted in a change to the grouping from 2013 onwards.

UK exports of services

UK exports of technical, trade- related, operational leasing and other business services types of services declined in 2015 from £18,094 million in 2014 to £17,384 million. This was the first period of annual decline recorded within this broad product grouping since 2011.

The decline in UK exports of technical, trade- related, operational leasing and other business services was experienced across all 5 continents in 2015. Asia experienced the largest decline in 2015 with UK exports of these types of services falling from £4,748 million in 2014 to £4,505 million. Within Asia, Singapore made the largest contribution to the decline, with UK exports of these types of services falling by £221 million in 2015 to a total of £600 million.

Despite also experiencing a decline, Europe remained the largest destination for UK exports of technical, trade- related, operational leasing and other business services in 2015, falling from £6,841 million in 2014 to £6,780 million . Within Europe, Norway saw the largest decline in 2015, with UK exports of these types of services falling from £1,028 million in 2014 to £502 million. Offsetting this decline was Italy, which saw UK exports of these types of services increase, rising from £224 million in 2014 to £931 million in 2015. Italy was also the country driving the growth in UK exports of these types of services to the EU.

UK imports of services

UK imports of technical, trade- related, operational leasing and other business services types of services declined in 2015, falling from £6,383 million in 2014 to £5,533 million ; the first period of annual decline within this broad product grouping since 2011.

Asia experienced the largest decline in imports of technical, trade- related, operational leasing and other business services, falling by £474 million to £1,162 million between 2014 and 2015. The decline is mostly attributable to imports from Singapore, which fell from £735 million in 2014 to £297 million in 2015.

The Americas experienced the second largest decline, with UK imports of trade- related, operational leasing and other business services falling from £1,251 million in 2014 to £945 million in 2015. The rest of America and the USA experienced the largest declines in 2015, with falls of £251 million and £134 million respectively.

Despite experiencing a decline, Europe remained the largest source for UK imports of trade- related, operational leasing and other business services. Imports of these types of services fell from £3,292 million in 2014 to £3,003 million in 2015. The majority of the decline was seen within the EU; primarily Italy, which declined by £123 million in 2015. This is in contrast to UK exports of these types of services to Italy, which more than trebled in 2015.

Professional, management consulting and research and development (R&D) services

Table 3 presents the service products used to compile the professional, management consulting and R&D services group up to 2012 and from 2013 onwards. Implementing the latest BPM6 recommendations resulted in a change to the grouping from 2013 onwards.

UK exports of services

UK exports of professional, management consulting and R&D services continued to grow in 2015, with UK exports rising from £31,063 million in 2014 to £31,919 million.

Europe remained the prime destination for UK exports of professional, management consulting and R&D services and increased in 2015, from £17,291 million in 2014 to £17,707 million. The growth in exports of these types of services from within Europe was mainly due to the EU, primarily driven by France, which saw UK exports of these types of services increasing from £1,148 million in 2014 to £1,539 million in 2015. Italy and Spain also made notable contributions to the increase, rising by £272 million and £271 million respectively.

UK exports to the Americas of professional, management consulting and R&D services showed a small decline in 2015, falling from £8,916 million in 2014 to £8,813 million. The decline was primarily driven by the USA, which saw a fall of £117 million to £7,666 million. Despite this small decline, the Americas continued to be the second- largest area in 2015 where UK exports of professional, management consulting and R&D services were destined for.

UK exports of professional, management consulting and R&D services to Asia continued to follow an upward trend in 2015, rising from £3,675 million in 2014 to £3,731 million.

UK imports of services

UK imports of professional, management consulting and R&D services increased in 2015, from £14,610 million in 2014 to £16,009 million.

In 2015, Europe continued to be the largest region where UK imports of professional, management consulting and R&D services originated from and increased from £7,953 million in 2014 to £8,688 million . Sweden made the largest contribution the increase, with UK imports of these types of services increasing from £296 million in 2014 to £479 million in 2015. The Irish Republic and France also made notable contributions to the increase, rising by £146 million and £138 million respectively.

The Americas accounted for most of the growth recorded in UK imports of professional, management consulting and R&D services, rising by £747 million to £4,908 million between 2014 and 2015. This increase was solely driven by the USA, with UK imports of these types of services increasing from £3,788 million in 2014 to £4,576 million in 2015.

Merchanting, other trade related and services between related enterprises

Table 4 presents the service products used to compile the merchanting, other trade- related and services between related enterprises group up to 2012 and from 2013 onwards. Implementing the latest BPM6 recommendations resulted in a change to the grouping from 2013 onwards.

UK exports of services

Exports of merchanting, other trade-related and services between related enterprises increased in 2015 from £14,590 million in 2014 to £16,419 million, reversing the downward trend seen in recent years.

UK exports of merchanting, other trade- related and services between related enterprises to Europe showed the largest increase in 2015, rising from £7,885 million in 2014 to £8,561 million, remaining the dominant area in receipt of these types of services in 2015. The Irish Republic made the largest contribution to the increase and rose from £1,335 million in 2014 to £1,887 million in 2015. Other notable increases in exports of these types of services were experienced with France and Russia, where UK exports rose by £278 million and £254 million respectively . Partially offsetting these increases were UK exports to Switzerland and the Netherlands, where UK exports of merchanting, other trade-related and services between related enterprises fell by £403 million and £294 million respectively.

Asia made the second largest contribution to the overall increase in UK exports of merchanting, other trade- related and services between related enterprises services, increasing by £571 million to an overall exports total of £2,267 million in 2015. Singapore and China saw the largest increases, rising by £175 million and £149 million respectively.

The Americas continued to be the second- largest area where UK exports of merchanting, other trade-related and services between related enterprises services were destined for, with exports worth £4,680 million in 2015. The USA remained the largest destination within the Americas for these exports.

UK imports of services

With the exception of 2013 and in contrast to exports, UK imports of merchanting, other trade- related and services between related enterprises followed an upward trend in recent years, which continued in 2015, with UK imports of these services increasing from £10,355 million in 2014 to £10,865 million .

UK imports of merchanting, other trade-related and services between related enterprises from Asia made the largest contribution to the overall increase in UK imports, rising from £1,584 million in 2014 to £2,160 million in 2015. Notable increases were experienced from Singapore, the Philippines and India.

Offsetting the increase in UK imports of merchanting, other trade-related and services between related enterprises was the Americas, with a decline of £561 million to £2,676 million between 2014 and 2015. This decline in UK imports of services was primarily driven by the USA, which fell from £2,838 million in 2014 to £2,488 million in 2015.

Europe remained the main area where UK imports of merchanting, other trade-related and services between related enterprises originated from and showed growth in 2015, rising from £5,154 million in 2014 to £5,471 million in 2015. Sweden made the largest contribution to the increase in 2015 and rose by £571 million to £771 million in 2015. Offsetting the increase in 2015 were imports from France and Germany, which fell by £186 million and £125 million respectively.

This section provides an overview of UK trade in service exports and imports detailed by industry.

UK exports of services

The 2015 estimates show that the professional, scientific and technical activities industries continued to make the largest contribution to the overall UK exports total and experienced a further increase in 2015 from £33,500 million in 2014 to £35,760 million. UK businesses within these industries exported a wide range of services in 2015; however, exports of legal services made the largest contribution, which increased from £4,552 million in 2014 to £4,918 million. Engineering services and services between related enterprises were the second and third largest service products exported by UK professional, scientific and technical activities industries in 2015, with exports of £4,598 million and £4,395 million respectively.

The construction industry experienced the largest decline in 2015 with service exports falling from £2,734 million in 2014 to £1,280 million. The UK exports total for the construction industry in 2015 signals the first period of annual decline, having previously followed an upward trend.

UK imports of services

The information and communication industries continued to make the largest contribution to the overall UK imports of services total and continued to show growth in 2015 rising from £14,963 million in 2014 to £16,190 million. Unsurprisingly, the main service products imported by the UK’s information and communication industries were telecommunications and computer services.

The professional, scientific and technical industries experienced the largest growth in UK imports of services in 2015, rising by £1,766 million to £14,489 million. The increase was driven by rises in imports to the UK of services between related enterprises, and research and development services, which rose by £819 million and £747 million respectively.

The manufacturing industry also made a notable contribution to the growth seen in UK imports of services in 2015, increasing from £6,766 million in 2014 to £8,299 million.

The International trade in services Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data and how it compares with related data

• users and uses of the data

• how the output was created

• the quality of the output including the accuracy of the data

International trade in services (ITIS) collects data relating to the amounts spent on both the imports and exports of UK businesses and collects geographical information as to where the services have either been imported from or exported to.

Types of transactions covered

Product: The statistical output from the ITIS survey covers the value of transactions between the UK and residents in other countries in respect of 52 products. The 2013 ITIS questionnaire has recently been revised in accordance with new international regulations. A breakdown showing the service products collected up to 2012 and from 2013 onwards can be found in Table 5.

Industry: The industry analysis enables estimation for the total international transactions in services by economic classification for well-defined areas of the economy using Standard Industrial Classification (SIC) information. Data from 2009 in this publication have been published in SIC (2007) Classification, which is an internationally recognised classification. This provides a framework for the collection, tabulation, presentation and analysis of data about economic activities. Prior to 2009, SIC (2003) Classification would have been used.

Geographical: Both industry and product information are analysed geographically. The tables within this publication show the countries to which services are exported and from which services are imported.

The geographical groupings used in the tables can be found in Table 6.

Earnings from third country trade, that is, from arranging the sale of goods between 2 countries other than the UK and where the goods never physically enter the UK are included. This activity is known as merchanting. Earnings from commodity trading are also included. As with merchanting, the service element is the profit or loss.

Types of transactions not covered

The purpose of the ITIS survey is to record international transactions that impact on the UK’s Balance of Payments, hence companies are asked to exclude from their earnings trade expenses such as the cost of services purchased and consumed abroad. Trade in services exports or imports that are invoices for the export or import of goods are excluded as they are already counted in the estimates for trade in goods.

The ITIS survey currently selects for the whole of the economy, with a number of exceptions:

• travel

• transport

• banking and other financial institutions

• higher education

• charities

• most activities within the legal profession

Coverage

The figures for the European Union (EU) relate to the 28 member states of the EU8 from 2013 onwards. Trade with EU institutions is also included in the EU totals and excluded from the international organisations totals.

Please note that all tables in this publication only include data collected via the ITIS and Annual Business Survey surveys.

The film and television (FTV) industries are included in the published data from 2009 onwards. For 2008, FTV figures were collected via a separate survey and data published in the International transactions of the UK film and television industries Statistical Bulletin 2008.

The ITIS survey is just one component of trade in services (TIS) estimates. Data for TIS in this report are consistent with the UK Balance of Payments, which can be found in Pink Book Chapter 3.

By analogy with trade in goods we refer to the type of service traded as a “product analysis” – the products being consistent with the sixth edition of the Balance of Payments Manual. The second type of analysis is referred to as the “industry analysis” – covering well defined areas of the economy.

In the following section both types of tables, industry and product have been analysed on a geographical basis by showing the countries to which services are exported and from which they are imported. Both of these types of analyses are preceded by geographical analysis of imports and exports of total international trade in services.

The industry analysis allows us to estimate the total international transactions in services for well-defined areas of the economy. It also tells us the exporting or importing country in relation to the UK.

Sampling error is the error caused by observing a sample instead of the whole population. While each sample is designed to produce the “best” estimate of the true population value, a number of equal- sized samples covering the population would generally produce varying population estimates. Sampling error is affected by a number of factors including sample size.

Sample surveys are used instead of censuses, because the process would be too lengthy and costly to be viable. Standard errors are an estimate of the sampling error and provide a measure of the precision of the estimate. A low standard error indicates a precise estimate. To aid comparison, the standard error is also expressed as a percentage of the total value. This quantity is called the coefficient of variation and it allows the standard errors to be put into context.

In addition to sampling errors there is the potential for non-sampling error that cannot be easily quantified. For example, undetected deficiencies may occur in the survey register and errors may be made by the contributors when completing the survey questionnaires.

The response rate for the 2015 annual survey is shown in Table 7.

In addition to this sample, we also select approximately 9,000 businesses via the Annual Business Survey and have included results from the quarterly ITIS survey collected for each of the quarters of 2016.

Non-response bias is a potential issue for all statistical surveys. Non-response bias occurs where the answers of respondents may have differed from the potential answers of non-responders. The risk of non-response bias is minimised by efforts to maximise response rates. Estimation techniques can attempt to correct for any bias that might be present. Despite this, it is not easy, on any survey, to quantify the extent to which non-response bias remains a problem. However, there is no evidence to suggest that non-response bias presents a particular issue for the ITIS survey.

Imputation methods are used to estimate values for all businesses in the sample that did not return data. Estimation methods are used to estimate values for all non-sampled businesses within the population in order to produce an overall estimate for the population.

The method used to calculate standard errors for ITIS statistics has been under review in recent years. ITIS standard errors for 2015 have been re-introduced in this edition of the publication.

The tables present ITIS estimates through a variety of formats. Some tables compare figures over several years but the majority provide the most recent geographic information by industry or product. The tables provide information in as much detail as possible without disclosing the details of any individual companies. Any disclosive data is replaced by the following symbol throughout the tables “..”. It is important to note that within the geographical tables, amounts are shown against the geographical area from which they were received, irrespective of where they were first earned.

European Free Trade Association (EFTA) comprises of Iceland, Liechtenstein, Norway and Switzerland.

The sum of constituent items in tables may not always agree exactly with the totals shown due to rounding. The following symbols have been used throughout:

.. Figures suppressed to avoid disclosure of information relating to individual enterprises

– Nil or less than half the final digit shown

Values shown are in current prices, which refer to the price at which the services were either bought or sold in the market.