Pointy-headed thread: Do you remember this tweet of mine from earlier this year? About how extraordinary flows of gold out of the UK are completely changing the picture of UK trade? Well, brief update: it's still happening. Big time.
In the past few quarters, the UK trade account has swung into positive territory for the first time since the 1990s. And not just positive territory: the biggest trade surplus EVER. £16.9bn in Q2 alone...
It's worth emphasising that even if you look at the trade balance as a % of GDP it's still one of the highest levels we've ever seen. Only one other quarter - Q1 1981 - had a higher surplus. And I don't think it's ever swung quite as dramatically as this...
And the story this time around - as last time around - comes largely back to gold. In the past year the amount of gold being "exported" from the UK has hit around £24bn. We "imported" about £15 billion of the stuff. This is totally unprecedented - and not a little odd
In fact if you were to count gold as a normal export it would be our third biggest export, just above pharmaceuticals (which we're a world leader in btw). But here's why I put it in inverted commas: it's not really an export. Indeed in most cases it doesn't even leave the country
London is the world's capital for the trade in physical gold. And when gold changes hands from a British owned institution or investor to a non-British one then that's counted as an export. Even though it usually doesn't even leave the vault!
How can we be sure this isn't gold leaving the country? Well for one thing these days the @bankofengland publishes data on how much gold it has in its vaults. And over this period it's actually risen a fair bit - the equivalent of £17bn or so bankofengland.co.uk/statistics/gold
I only mention all of this because this morning I found myself leafing through the ONS balance of payments data (as you do) and I struggled to make sense of it. Look: including gold the deficit is £2.8bn. Exclude gold and it's £12.1bn. That's a mind-boggling difference!
And unless I've missed something, save for that par 👆, @ONS still uses that distorted current account fig everywhere else. In its tables, its charts etc. That distorted figure is the one that'll go into IMF/OECD databases and be used to compare UK to other countries, I assume
I couldn't even find an official @ONS series for the underlying non-distorted current account, so I made one myself. It's the red line here. Black line is the "official figure". Yellow bars are the net balance of gold movements in and out of the UK which I've simply subtracted.
Why am I going on about this? Because the current account is one of the most important economic statistics. And thanks to the way we account for gold movements it's becoming a real mess. It is poss to adjust for this and the @ONS is trying hard but it's fighting an uphill battle
There are international statistical rules stipulating that we include these flows. So while @ONS includes plenty of small (and big) print, the official measures - the ones that most people pay attention to and are used for international comparisons - are increasingly meaningless.
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The Chinese owners of British Steel say they are now considering shutting their blast furnaces and end steelmaking at Scunthorpe in early June - only a few months away.
It would mean an end of virgin steelmaking in the country that invented it during the industrial revolution
British Steel say the main question now is timing: whether the operations will close in June, in September or later.
It says tariffs are one of the reasons the blast furnaces are "no longer financially sustainable".
Press release 👇
The news means @jreynoldsMP faces two interlocking crises in the coming months: 1. The imposition of US tariffs on an ever growing segment of British exports 2. The end of virgin steelmaking (the UK would be the first G7 country to face this watershed moment).
This is big stuff
Donald Trump just announced 25% tariffs on anyone importing oil from Venezuela.
This is odd.
Because the country importing the most crude from Venezuela is... the US.
Capital Economics chart of Ven oil exports by Capital Economics via @rbrtrmstrng
But it raises a bigger point
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Why does the US import so much oil from Venezuela?
Mainly for the same reason it imports so much oil from Canada.
And no it's not just because they're close.
It's because most US refineries are set up to refine the kind of oil they have in Venezuela and Canada.
To understand this it helps to recall that crude oil is actually a broad term. There are LOTS of different varieties of crude - a function of the geology of where the oil formed and the organic ingredients that went into it millions of years ago.
It's called "crude" for a reason
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Here's a thread about ALUMINIUM.
Why this commonplace metal is actually pretty extraordinary.
How the process of making it is a modern miracle...
... which also teaches you some profound lessons about the trade war being waged by Donald Trump. And why it might be doomed.
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Aluminium is totally amazing.
It's strong but also very light, as metals go.
Essentially rust proof, highly electrically conductive. It is one of the foundations of modern civilisation.
No aluminium: no planes, no electricity grids.
A very different world.
Yet, commonplace as it is today, up until the 19th century no one had even set eyes on aluminium. Unlike most other major metals we didn't work out how to refine it until surprisingly recently.
The upshot is it used to be VERY precious. More than gold!
🚨TARIFFS🚨
Here's a story that tells you lots about the reality of tariffs both for those paying them & those hoping to benefit from them.
A story of ships, storms, bad luck and bad policy.
It begins a week and a bit ago, with a man frantically refreshing his web browser...
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That man is Liam Bates.
He runs the UK unit of a steel company called Marcegaglia. They make stainless steel - one of the most important varieties of this important alloy. The method of making it was invented in Sheffield. And this company traces its DNA back to that invention.
Watching the process is TOTALLY amazing.
They tip a massive amount of scrap: old car parts, sinks etc, into a kind of cauldron and then lower big glowing electrodes into it.
Then flip the switch.
⚡️Cue a massive thunder sound as a controlled lightning storm erupts inside it.
🧵Three years ago, when Russia invaded Ukraine, EU, UK and other nations vowed to wage economic war, via the toughest sanctions in history.
So... how's that going?
We've spent months documenting what ACTUALLY happened. Here's a thread of threads on the REAL story on sanctions...
1. Flows of dual use items, including radar parts, drone components and other parts used by Russia to kill Ukrainians, carried on from the UK and Europe to Russia, via the backdoor (eg the Caucasus & Central Asia)
2. Of all the goods sent by the UK to Russian neighbours, few were as significant as luxury cars.
Having sanctioned Russia (the idea being to starve Putin's cronies of luxuries) Britain (and Europe more widely) began sending those sanctioned cars in via the backdoor instead
If the main thing the US really wants out of a deal with Ukraine is "50% of its rare earth minerals" then I'm surprised this can't be wrapped up pretty quickly.
Why? Because Ukraine doesn't HAVE many rare earth resources.
Really. As far as anyone knows it's got barely any...
Yes, Ukraine has lots of coal and iron and manganese.
It also has some potential sizeable reserves of stuff like titanium, graphite and lithium. Not to mention some promising shale gas.
But of the 109 deposits identified by KSE only 3 are rare earth elements
Now in one respect I'm making a pedantic point: a lot of people say "rare earth elements" when they actually mean "critical minerals".
The two aren't the same thing.
Rare earth elements are a v specific bit of the periodic table: actually they're NOT all that rare.
More on them👇