An overview of UK export growth since 1960
This overview focuses on UK exports and on their growth, as do many of the charts that follow. It does so on the grounds that this is the decisive metric in assessing the merits, from a trade point of view, of remaining in or leaving the EU. Figures on ‘trade’ alone or ‘trade intensity’ combine imports and exports, and neither Edward Heath nor anyone else who negotiated UK entry did so on the grounds that the UK could increase its imports.
Figure 17.1 presents the UK exports to 14 countries that were to become members of the present EU from 1960 to 2012, as a percentage of total UK exports to all 22 of the OECD countries for which we have data over this half century. To provide a comparative marker, it also gives the proportion going to the three European countries that opted to remain independent.
What it shows is that the proportion of goods going to the future EU member countries grew rather sharply, by 12%, over the twelve years before the UK entered the Common Market, from 49.6% in 1960 to 61.6% in 1972. However, over the 40 years of EU membership, for all the costs and obligations incurred, for all the treaties negotiated, and for all the immense time and anguish spent arguing about various aspects of the EU project, the proportion of UK exports going to the UK’s future EU partners has hardly changed at all. To be precise, it has fallen by 2%, from 63.9% in 1973, the year of entry, to 61.9% in 2012; 0.5% of the fall occurred during the years of the Single Market, despite the insider advantages the UK was supposedly enjoying.
The overall impression of this graph is, surely, that EU membership and the Single Market changed nothing. Year by year, the proportion has, as the graph shows, fluctuated a little, near 60% in 1981, and touching 70% in 1986-87, and there is an ominous downwards slide since 2004, (some years before the financial crisis one may note), but there is no indication whatever, by this first simple measure, that the EU or the Single Market has had any impact on UK exports of goods at all. It therefore gives no clue as to where the insider advantages might be found.
The green line plotting the proportion of the exports of the three independent countries only makes matters worse. It also fluctuates, but overall it contrasts with exports to the present members of the EU. Instead of continuity and slight decline, exports to these three countries increased during all three periods, before the UK joined the EU and was still a member of EFTA, from 5.1% to 6.5%; over the Common Market years from, 6.0 to 7.6%, and most of all under the Single Market, from 7.0% to 10.7%. Over the half century, therefore, the proportion going to the non-EU members has more than doubled, so the Single Market years have been rather good years for UK exports to them, even though they are not members of it, and have no part in determining its rules. By themselves, these figures suggest that the UK enjoyed more advantages trading with outsiders, albeit outsiders with which the UK or the European Commission had bilateral trade agreements, than with fellow insiders.
Figure 17.2 presents an overview of the UK exports of goods to the other eleven founder members of the EU Single Market since 1960, as a share of UK export of goods to the world. Overtime, they have increased both in value and as a share of UK’s total goods exports.
However, the interest of this long-term perspective is that it enables us to compare the amount and rates of growth of UK exports before the UK joined the European Community, over the two Common Market decades 1973-1992, and the 21 years of the Single Market 1993-2013.
Over the 13 pre-entry years:
- UK exports to these 11 countries grew by 137%;
- At an annual rate of 7.5%;
- And as a share of the UK’s world exports increased from 25.0% to 43.4%.
Over the two Common Market decades:
- UK exports to these 11 countries grew by 171%;
- At an annual rate of 5.4%;
- And as a share of the UK’s world exports increased from 43.4 to 57.6%.
Over the 21 years of the Single Market:
- UK exports to these 11 countries grew by 82%;
- At an annual rate of 3.0%;
- And their share of world exports has fallen from 57.6 to 55.3%.
Thus, from these measures, it appears that UK exports to these 11 countries grew fastest before the UK joined the European Common Market, though over the two decades following entry UK exports continued to grow at a rapid rate. The Single Market has been a period of decline, of decelerating growth of UK exports. No rigorous attempt has been made to explain why this happened, probably because, in the UK at least, the Single Market has been continuously portrayed as a success and even as the ‘Crown Jewel ‘of European integration.