What does Britain do for money? UK exports 2007

After the financial turmoil of last year, 2009 opens with bleak prospects for the UK economy. In the face of massive losses it behoves us to ask, how does Britain make money? I.e. if you viewed Britain as a business, where does its revenue come from? This is a big question, and I can only present a brief answer here - an overview of British exports.

It is easier to find charts of GDP. But GDP combines actual income with internal sales, so it reveals what the British do for money, but not what the UK itself does for money.

This chart shows gross UK exports of both goods and services, plus net income from investments - that is, it shows everything that leads to money entering the UK. It is based on 2007 figures from the National Office of Statistics, published in the 2008 "Pink Book". It doesn't consider imported inputs, which has the effect of inflating the apparent size of some sectors.

Overall we sell more goods than services. That said, we import a lot more goods than we export - we have a modest trade surplus in services, and a worrying trade deficit in goods (not shown here - see the Pink Book for details).

Manufacturing is perhaps more important than you might realise. The UK's manufacturing sector has certainly shrunk dramatically over the last decade/century, but it still constitutes the largest sector of the country's income. (Note that the importance of manufacturing will have been inflated somewhat here by the lack of input-output analysis.).

After manufacturing, a worryingly large slice of the pie is made up of financial services. Worrying because this is likely to take a pounding in the coming years.

The surprise for me was that chemical production is a very large part of the basis of our economy. The chemical industry doesn't receive as much press attention as manufacturing or finance - perhaps because it isn't going down the toilet except when intended.

A quick analysis of the Pink Book shows that UK PLC is not in great shape: we have been running a trade deficit during the boom period, which will be unsustainable in the coming recession.