This Briefing Paper aims to further understanding of the importance of trade in services for the UK economy. In particular, to shed light on the relationship between services and manufacturing trade, including an increasingly significant form of services trade known as Mode 5. We explore input-output data, firm-level data and the links between services and manufacturing in the context of the UK’s independent trade policy. The authors provide evidence that shows that the nature of how these services interact with goods trade and the policy or market access barriers and their implications need to be understood in much greater detail for policy purposes. Read Briefing Paper 66: Links between services and manufacturing trade in the UK: Mode 5 and beyond

International trade in a digital world is increasingly influenced by domestic regulation and is linked to non-trade areas such as health or climate change.  This makes it difficult for the WTO’s consensus- and trade-focused structure to make swift progress.  This Briefing Paper looks at how the G7 leadership across all four Trade Tracks could provide the necessary impetus for multilateral or open plurilateral solutions, in order to avert further fragmentation of the trading system. Read Briefing Paper 59: G7 LEADERS SHOULD DISCUSS INTERNATIONAL TRADE (SERIOUSLY)

The Trade and Cooperation Agreement (TCA) between the UK and the EU came into force on the 1st January 2021. This Briefing Paper looks at the main changes to trading services. The authors find that provisions in the TCA are a major setback for services sectors (compared to the conditions for trading services within the Single Market or during the transition period), particularly for financial and transportation services. As a service-driven economy, this is a weak deal for the UK. A general ramification is that services trade with the EU may have to rely increasingly on commercial presence rather than cross-border supply. This shift, though by no means costless, will be relatively easier for large businesses that may already have affiliate enterprises within the EU-27. Furthermore, the TCA is an incomplete agreement in the sense that the precise conditions under which services can be traded with the EU still need to be worked out in a number of areas, including financial services, cross-border data flows, and mutual recognition of professional qualifications. Read Briefing Paper 53: TAKING STOCK OF THE UK-EU TRADE AND COOPERATION AGREEMENT: TRADE IN SERVICES AND DIGITAL TRADE

The UK is one of the most services-oriented economies in the world, both in terms of production and exports.  Services inputs embodied in manufacturing exports constitute an important but under-appreciated kind of services exports, so-called mode 5 services trade.  This Briefing Paper provides the first estimates of mode 5 services trade disaggregated by UK region and industry, respectively, and over time.  UK manufacturing exports entailed over £70 billion worth of domestic services inputs in 2017, which play an integral role in the competitiveness of UK manufacturing exports.  Since these services are produced locally, changes in the trading environment for manufactures have direct implications for domestic employment in services sectors. Read Briefing Paper 22 – THE ENGAGEMENT OF UK REGIONS IN MODE 5 SERVICES EXPORTS

The UK’s exit from the European Union (EU) is likely to have significant ramifications for services trade because the Single Market has been particularly salient for facilitating the international exchange of services.  Yet the discussion of potential effects on the British economy of Brexit has largely been confined to manufacturing sectors at the national level.  Less attention has been paid to services sectors, even though the UK economy is particularly strong in exporting services. To address this void, this Briefing Paper describes the rich pattern by which UK regions are exporting different kinds of services.  In particular, it traces the extent to which UK regions export services relatively intensively to EU countries relative to other destinations outside the EU. Read Briefing Paper 14 – BREXIT AND REGIONAL SERVICES EXPORTS: A HEATMAP APPROACH and the Online Appendix.

Trade in services is economically significant for several reasons; it directly affects UK consumers’ welfare in such sectors as telecommunications, health or retail distribution; producer services such as finance, transportation or professional services are inputs into both the production and international exchange of goods; and it makes a positive contribution to the UK’s current account. Brexit will have important repercussions for the UK’s economic ties with the EU in the realm of services markets. This paper highlights how Brexit might directly and indirectly affect UK services trade and policy-making in this area. Read Briefing Paper 6 – SERVICES TRADE IN THE UK: WHAT IS AT STAKE?