Photographer: Simon Dawson/Bloomberg
benchmark

A Tale of Two Surpluses: U.K. Puzzles Over Trade Data With U.S.

Statisticians are struggling to reconcile differing trade figures either side of the Atlantic

Making different countries’ trade statistics add up is a tricky business.

The U.K.’s Office for National Statistics is currently working to explain a 33 billion-pound ($46 billion) discrepancy between British and American figures on trade in services, the sector that makes up the biggest part of both economies. So far, the ONS can account for just 4 billion pounds of the difference, it said in a blog post Monday.

When Trade Figures Don't Add Up

U.K. statistics office working to establish causes of discrepancies

Source: Office for National Statistics, UN Comtrade database

Note: 2014 data. Shows total asymmetry on imports and exports from the U.K.'s perspective

In what is a common phenomenon known as trade asymmetry, both Britain and the U.S. claim to be net exporters to the other. In services, the U.K. reported a trade surplus with the U.S. of around 23 billion pounds in 2016, while the U.S. says it has one of around 10 billion pounds with the U.K.

The issue exists with other trade partners as well – in 2014, there was a 19.2 billion-pound discrepancy with Luxembourg and one of 14.7 billion pounds with Germany, the ONS said.

“There is still a sizable gap between the two sets of figures that we haven’t yet explained,” said Adrian Chesson, head of balance of payments and trade statistics for the ONS. “As the U.K. prepares to leave the European Union and seeks to negotiate its own trade deals, it has become even more crucial that we have a deeper understanding of our trading relationship with other countries.”

Britain can’t formally sign deals with other countries until it leaves the EU, but it can prepare the groundwork in the hope of ratifying them soon after. Prime Minister Theresa May is aiming to strike a free-trade agreement with the U.S., and has discussed the matter with President Donald Trump.

While economists agree that trade balances are irrelevant to forging new deals, any changes in the statistics could be significant to the U.S. administration, which has prioritized reducing deficits.

The 4 billion-pound discrepancy  that researchers have accounted for so far is due to “differing methodologies when measuring financial services,” the ONS said. The U.S. also includes crown dependencies, like the Channel Islands, in its definition of the U.K. in its figures, which the ONS excludes.

(For more economic analysis, see Benchmark)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE