UK trade deficit has widened, as businesses seek to sell services beyond Europe

France, Germany, Ireland, and the Netherlands were the most important eurozone markets for UK services in the first half of the year, new official data has revealed.

In a new series of quarterly data, the Office for National Statistics has shown which countries had the biggest appetites for UK services in the three months to June.

The US, at £8.4bn worth of exports, was the single largest market, but the overall value of exports to the combined eurozone, including Germany at £2.5bn and the Netherlands at £2.3bn, dwarfs that of the US; the eurozone accounts for £14bn of exports for the three months to June this year.

While the data excludes banking, other key financial services such as commodities trading and insurance were represented in the figures.

This report, which offers a far more up-to-date snapshot of the services economy, comes after the pink book – the annual summary of the UK’s balance of payments, money coming in and going out of the country – revealed the country’s trade deficit had widened to 2.2pc of GDP in 2016, meaning imports outstripped exports by the greatest level for six years.

China and Hong Kong accounted for £1.8bn worth of service exports in the second quarter of 2017, and efforts to capitalise on these markets are being explored at pace, a report released on Thursday by the Confederation of British Industry, has found.

The UK was the eighth biggest source of foreign direct investment among developed economies in the past decade, and, as China seeks to diverge from its history as a leading exporter of goods towards a more service driven economy, the UK has a significant role to play, according to the industry body.

Areas such as aviation and education were among the most in-demand sectors for UK services in China. With 90,000 Chinese students seeking a British education, UK universities were the largest single destination for international study.

The study suggested that what the UK might lack in scale of investment, it made up for in strategy; by concentrating investment on areas inland, which are more ripe for development than more advanced export-fed coastal regions. This follows the aims and investment flows of the Chinese government, as it seeks to spread the benefits of economic gains more evenly across the country.

The CBI argued that forming closer business and investment ties with China suits the competitive advantages of the services dominated UK economy, as the world’s second largest economy tries to transition away from an export-driven economic-model.

Efforts to address the newly high priority of improving air quality and environmental safety would be a strategic win for UK businesses, according to Freya Beamish of Pantheon economics, who said the pressure to address air quality was now “more important than GDP targets” based on statements made at the recent Communist Party Congress .

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