Europe: the UK's largest market

Europe: the UK’s largest market

Europe will remain Britain’s largest market for the foreseeable future

The statistics below include all EU and EFTA countries except the UK

  • GDP (nominal): .4 trillion (more than six times larger than UK GDP of .4 trillion)
  • GDP (PPP): .5 trillion (more than six times larger than UK GDP of .3 trillion)
  • Population: 457 million
  • GDP per capita (PPP): ,700 (16% lower than UK’s ,900)
  • GDP growth over 2012-18: 1.4% p.a.[52]
  • UK exports in 2012: £245.2bn (49.8% of UK total exports)
  • UK imports in 2012: £302.7bn (57.5% of UK total imports) [53]

Europe is Britain’s most important trading partner by some distance. Seven of the UK’s top ten export destinations are in the EU (in order: Germany, the Netherlands, France, Ireland, Belgium, Spain and Italy), and total exports to the EU and EFTA accounted for around 16% of GDP in 2012.[54] Seven of Britain’s top ten import markets are also in the region.[55]

  • Europe is a huge rich economy, near to Britain geographically. The ‘four freedoms’ of the Single Market go beyond a standard free-trade agreement to tackle non-tariff barriers, making the EU more open to British businesses than any other market in the world.
  • 66% of Britain’s exports to the EU and EFTA are goods, against 56% of exports to other regions, which partly reflects the role of transport costs but also the impact of the Single Market. Financial and business services account for over two thirds of services exports to the EU and EFTA. 
  • The EU and EFTA account for 53% of the stock of FDI into Britain and 51% of Britain’s outward FDI. 
457

Million people - the size of the European market excluding the UK

UK success in – and integration with – Europe

Scotch Whisky Association: The EU is the industry’s single largest export market and is vital to the Scotch Whisky industry. Global exports in 2012 were worth £4.3 billion, of which sales to the 26 other EU member  states accounted for £1.45 billion. France is the world’s largest Scotch Whisky market after the US, while sales in new EU states like Poland, Romania, Bulgaria and the Baltic nations are growing strongly.

Tesco: One of the largest supermarket chains in Central Europe and has been active in the region since 1994. The market leaders in Hungary and Slovakia and the second-largest player in the Czech Republic and Poland, the company’s revenues in the region exceed £9 billion per year and it has nearly 1200 stores.

Marks & Spencer: In recent years Marks & Spencer has expanded across Europe where the company now has 155 stores and has launched local internet shopping sites in 8 key markets across Western Europe. In addition to stores in established western markets like Ireland, France and Netherlands, Marks & Spencer has operations in a number of East European markets including Czech Republic and Poland.  

50 %

Percentage of UK exports to EU & EFTA

There are still new opportunities emerging in Europe

The EU and EFTA are growing slowly. Their share of UK exports has fallen from 58% in 1998 to 50% in 2012 – and, with the rise of emerging economies, it is set to fall further. The decline in Europe’s share of trade has recently been exacerbated by the recession and Eurozone crisis, and, although it may stabilise in the years ahead, the long-term trend is nonetheless downwards.

Even so, the scale of Britain’s exports to the EU and EFTA is such that even a modest recovery in Europe would be positive for Britain.

Furthermore, expansion of the EU has made it an increasingly diverse trading bloc: parts of the eastern EU are growing more rapidly and represent an under-exploited trading opportunity. The countries that have acceded to the EU since 2004 have a combined economy the size of Spain and are forecast to grow faster than the EU average. The UK’s exports to the 13 accession countries account for 6.8% of its total exports to the EU and EFTA, against their 8.8% share of the region’s GDP (excluding the UK).

There is still much work that can be done to further deepen the Single Market and, even with the ‘four freedoms’, barriers to trade and investment still exist. For example, in services, untapped potential exists in sectors including e-commerce, professional services and transport, given that services only accounts for around one-fifth of all EU trade yet is responsible for over 70% of the EU’s GDP.

$15 tn

Size of the European economy


References

[52] EU and EFTA, IMF WEO April 2013

[53] EU and EFTA, 2013 Pink Book

[54] ONS Pink Book 2013

[55] In order: Germany,