Figures show EU’s importance for the services sector in Wales

MORE than a third of services exported from Wales go to EU countries. Companies based in Wales exported £5.6bn worth of services to the European Union in 2017. That was 35% of total service exports worth £8.3bn, according to new research from the Office for National Statistics (ONS).

European Single Market rules mean goods, capital, services and people can currently freely move between EU countries.

Within the Single Market, there are no tariffs or taxes on trade – which is unlikely to continue once the UK leaves the EU.

The main services exported to the EU by Wales relate to financial and insurance activities, making up 31% of the total EU exports in 2017 and worth £905m, according to the ONS research.

The UK exported £278.7bn worth of services in 2017. Of that, £114.7bn, or 41%, went to EU countries.

Financial and insurance activities was the sector that contributes the most to total service exports, with £75.9bn or 27%.

Professional, scientific and technical activities was the second-biggest contributor (17%), followed by information and communication (15%).

The largest share of service exports came from London, which contributed 41.8% (£116.6bn) to the total, followed by the South-East (£44.7bn) and Scotland (£21.9bn).

When measured against a region’s total gross value added (GVA) – a measure of the value of goods and services produced – London appears most reliant on service exports.

As a percentage, these were about 27% of London’s £431bn GVA in 2017.

The South-East, for which service exports were the equivalent of 17% of their GVA, and Scotland (16%) also saw a fairly high percentage.

Marta Paczos, senior economist at the National Institute of Economic and Social Research, commented: “If the UK leaves the EU without the deal, UK exports of services to the EU will be faced with the same restrictions as exports of any other third country.

“On the other hand, May’s deal covers mostly goods trade, leaving out many aspects related to services trade beyond the scope of the agreement; they were sketched in the political declaration and intended to be negotiated in due time.

“UK service exporters that rely on their sales to the EU would likely have to relocate or set up new offices in the EU in order to have a commercial presence in the EU, as it will not be possible any more to provide some services from UK-based headquarters.

“UK services exports are also likely to be hurt by the restrictions to the movement of labour, as some services are delivered abroad by the movement of natural persons – that is by the experts travelling abroad to deliver the service.

“For instance, UK engineers servicing machines in France or UK lawyers advising in Spain.”