U.K. No Island When it Comes to Exports, Bank of England Analysts Say

(Bloomberg) -- The U.K. is no island when it comes to exports, with the ability to access global value chains significant to the economy, according to a Bank of England staff blog.

Analysts at the central bank’s Structural Economics Division used a decomposition of U.K. gross exports into different value-added components to illustrate Britain’s trade interlinkages. The findings come as the U.K. looks to reshape its trading relationship with the world after it leaves the European Union.

About 60% of global trade is in intermediate goods and services that are incorporated at various stages in the production process before final consumption, and U.K. exports more value added in these intermediates than in actual end products, Tommaso Aquilante, Marco Garofalo and Enrico Longoni wrote. That contrasts with a country like China which takes inputs from others and assembles the final goods to be exported.

“Being able to access and contribute to foreign supply chains seems to be important for the U.K. both on the exports and imports side,” the researchers wrote in a post on the Bank Underground blog. “However, global value chains appear to be a more significant component of U.K. exports rather than imports.”

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, David Goodman, Andrew Atkinson

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