By Saif Ullah, Researcher in the City of London Research Team
Last week (11/05/17), the Office for National Statistics (ONS) published new data estimating the value of service exports by sector across UK regions and countries. This is the second year that the ONS has produced the experimental dataset, with the most recent estimates covering trade statistics from 2015.
The latest data emphasises the significant contribution made by London in terms of service exports. Nearly half (46%) of Great Britain’s service exports came from London in 2015, amounting to £100.4bn. This is more than the rest of England’s service exports put together (£96.3bn), and 11% higher than its level in 2011 (£90.1bn). The data also indicates that London has increased its share of Britain’s service exports from 2014, where it made up 43.1% of the total (£92bn).
There are several sectors in which London is a particularly dominant service exporter. 56% of Britain’s financial service exports (not including insurance and pension services) derive from London, further emphasising the sector’s importance to the UK’s trade fortunes: as Fiona’s blog highlighted last week, the UK’s financial services account for over one-fifth of global trade in that sector. Elsewhere, the capital’s construction (62%), travel (55%), admin and support services (58%) and information and communication (54%) exports also comprise a large part of each sector’s total service export value.
Breaking down London’s service exports by sector, financial services form the largest part of the capital’s total service exports, at 28% (£28.3bn). Other major service export sectors for London are real estate and professional, scientific and technical services (17% of London’s total, or £16.6bn), travel (16%, or £16.3bn), and information and communication (16%, or £15.6bn). Insurance and pension services make up a smaller proportion of the capital’s service exports at 2% (£2.4bn).
Which sectors have seen the most growth in terms of their service exports value? Comparing the most recent figures to those from 2011, information and communication has seen the greatest growth in terms of its proportion of London’s total service exports, making up 15.6% of the total value in 2015 compared to 12.3% in 2011. In absolute terms, information and communication service exports grew by £4.5bn over the period. Travel service exports saw the next biggest growth, making up 16.3% of London’s service exports in 2015, compared to 13.1% in 2011. This equates to £4.5bn growth over the period.
Other sectors that saw growth in service exports over the period were transport, which saw its share of London’s total service exports increase by 1.2 percentage points to 10.9% in 2015 (£2.2bn increase), and real estate, professional, scientific and technical services, which saw its share grow by just over two percentage points to 16.5% (£3.6bn increase).
While financial services remains the dominant service trade exporter in London, its share of London’s total service exports has declined the most – its share fell from 34.1% in 2011 to 28.2% in 2015, with the absolute value of its service exports declining by over £2bn.
In summary, this latest trade data release re-emphasises several key points concerning the London and its place in the overall economy:
- Service exports from London form a huge proportion of Britain’s total service exports, and are more than the rest of England on its own;
- Particular sectors in London, such as financial services, admin and support services, and travel, dominate Britain’s overall service exports for those sectors;
- Tech services (information and communication) and travel services are becoming increasingly important export services for London, having increased their share of the capital’s total service exports the most over the last five years.
- Financial services remains London’s most valuable service export, but its share of London’s total service exports has declined since 2011, perhaps demonstrating the capital’s growing business diversification, as well as indicating an increased level of maturity of such firms that are now looking to grow through exporting.