On Wednesday @KemiBadenoch made a speech to Parliament on the UK’s trade performance in which she stated the data: “Definitively disprove the claims of those who prophesied a catastrophic economic collapse when we left the EU to become a sovereign nation.”

As you can imagine, the response form the anti-brexit brigade which has spent the last 8 years trying hard to present Brexit as an economic disaster and an entirely irredeemable event was angry and vitriolic. For example this thread by @EdConwaySky

@EdConwaySky said: “there's a few problems with the data the biz/trade sec is quoting here. When you correct them, the picture looks a little different...” Well let’s take a quick walk through Ed’s commentary & see if he is correct

Ed complains that @KemiBadenoch speech referred to a chart which made it look like “export volumes are bigger than ever before…Except this is true only when you fail to adjust for inflation” This simply isn’t true on many levels.

First (& this really is basic stuff) this isn’t a chart of trade volumes but trade values. And when Kemi stated that “the value of UK exports was £862 bn in the 12 months to February 2024” she was both correct & clearly referring to values (price paid) & not volumes (number sold)

Kemi made that explicit when she later referred to the fact that “Exports are now 2% above 2018 when adjusted for inflation.” ie when she referred to export performance in volume & not value. So Ed is wrong to suggest Kemi was not both clear & correct about the date she quoted

Ed also argued that @KemiBadenoch should have used only the inflation-adjusted series “as we really should when comparing flows over time”. First. Well Ed. As we have seen above. She did.

Second, a lot of anti-brexit commentators keep making this argument. That trade should only be looked at in volume & not value. And frankly it simply isn’t true. For goods, volume is a good measure of low value, high volume items (like widgets)..

...but is a poor measure of high value, low volume items (like satellites and aircraft parts) which the UK tends to excel in. For Services, volume is a very poor measure of trade as all economists know. How do 5 deals one year for £10m compare to 10 deals the next year for £5m?

In volume terms “trade has doubled” but in value terms trade has halved. And in the real world what really matters to whether people keep their job or get a wage rise is not the volume of deals but the pounds, shillings and pence they generate.

And as all economists (should) know, this is particularly important for the UK because Services represent over 50% of UK exports vs only c20% for the world as a whole

What really matters when you are comparing trade performance between countries is that you compare apples with apples. That means there is nothing wrong with looking at UK export performance in value terms if you are comparing against others export performance in value terms.

And as the chart below demonstrates, on that basis the UK is performing in line with peers Germany and France

The argument that it is imperative or that “we really should” compare only in volumes because of recent high inflation might hold water if there were very different inflation effects in different countries over that period.

But that simply hasn’t been the case as this chart of producer price inflation in the UK, Germany and France demonstrates

@EdConwaySky goes on to say that the other problem with @KemiBadenoch speech is that she makes no adjustment for rising gold exports in her trade figures.

Apart from the fact it is amusing that @EdConwaySky then quotes the gold exports in value and not volume terms (tut, tut Ed haven’t you just spent a half dozen tweets explaining why that is wrong).

But if you do look at UK exports in volume terms excluding precious metals then you can see that not only is Kemi still correct in her analysis, but UK (volume) exports are bang in line with the long term trend since 2006. No sign of a Brexit effect here

@EdConwaySky goes on to complain that @KemiBadenoch quotes @UNCTAD data that UK overtook France, Neth & Japan to become the world's 4th biggest exporter saying this adjusted for gold sales the performance would be far less impressive

@EdConwaySky is correct, the data does include precious metal sales. But as the chart below shows UK, France, Netherlands and Japan have been vying for fourth place for twenty years. There is no negative Brexit effect in these figures at all (the point @KemiBadenoch was making)

@EdConwaySky goes on to look at UK goods exports excl precious metals in volume terms and points out that “EU goods exports” are going down.

The true picture is shown in the chart below. As you can see, not only are UK goods exports to the EU within a whisker of the long term (since 1997) trend line. But exports are running at the same levels as in 2016, 2010, 2008, 2005 and 2000.

Indeed as the chart demonstrates, the real issue with UK goods exports to the EU is that they haven’t really grown (in volume terms) in over 20 years (i.e. as members of the EU).

@KemiBadenoch is once again correct to argue that there is no disastrous Brexit effect in this data. But perhaps she should also have asked pro EU commentators where the supposed benefits of SM membership are to be found?

@EdConwaySky also states “non-EU goods exports are going down”. He is correct they are. Or to be more precise, they have failed to recover post the Covid collapse.

@EdConwaySky In fact as the chart below demonstrates it is UK goods exports to non EU countries where the UK is actually underperforming versus historic trends

@EdConwaySky If Brexit was responsible for a supposed underperformance in UK goods exports you would expect to see that reflected in UK goods exports to the EU. Because that is where leaving the SM & CU has increased trade friction.

@EdConwaySky Instead what we see is relative underperformance in UK goods exports in volume terms to the rest of the world. Clearly, leaving EU does not affect ROW goods exports. So what impartial commentators really should be asking is why UK goods exports to non EU underperforming.

@EdConwaySky The reason they don’t is because the answer cannot be Brexit. Brexit cannot be blamed. Rather the answer is much more likely to lie in the sectoral split of UK goods exports as @CeeMacBee explains here

@EdConwaySky @CeeMacBee @EdConwaySky is correct to praise @KemiBadenoch for emphasising the performance of UK services exports which have grown 30% since 2016, are 12% above post covid levels and are considerably outperforming the rest of the G7

@EdConwaySky @CeeMacBee @KemiBadenoch But he is wrong to blame the fall in goods exports volumes on Brexit. Because as we have seen above, the real issue with UK good exports is to the ROW not the EU.