1/ When your least favorite uncle hits the sherry this holiday season and starts lecturing the family WhatsApp group about the EU trade surplus signaling their imminent surrender, I humbly suggest you counter... with phone books (Google what those are, Generation Z).
2/ Imagine you have in front of you two phone books.
The one on the left contains the names of every business in the UK that exports anything overseas.
The on the right contains the same for but for European Union firms.
The one on the left contains the names of every business in the UK that exports anything overseas.
The on the right contains the same for but for European Union firms.
3/ Now your sweaty uncle is right, the EU has about a 30% trade surplus with the United Kingdom.
That means we can (very crudely and purely illustratively) assume 30% more of the businesses in their book sell to the United Kingdom, than the other way around.
Point Richard.
That means we can (very crudely and purely illustratively) assume 30% more of the businesses in their book sell to the United Kingdom, than the other way around.
Point Richard.
4/ However!
The EU27 book is over five times thicker because the EU collectively exports so much more every year than the UK.
That's even if you don't include 'exporters' selling across national borders within the EU 27, which is a HUGE (150% of EU->RoW trade last year).
The EU27 book is over five times thicker because the EU collectively exports so much more every year than the UK.
That's even if you don't include 'exporters' selling across national borders within the EU 27, which is a HUGE (150% of EU->RoW trade last year).
5/ So let's open up both books and pick names at random.
The odds of hitting a UK business with EU customers is much higher than the odds of hitting an EU business with UK customers.
There may be more UK exporting names in the EU book, but they're lost in a much larger tome.
The odds of hitting a UK business with EU customers is much higher than the odds of hitting an EU business with UK customers.
There may be more UK exporting names in the EU book, but they're lost in a much larger tome.
6/ Moreover, for a number of mostly obvious reasons, if you do hit an EU business with UK customers, the odds of the UK being their only or their major client are much smaller than the reverse.
An EU business selling to the UK is probably exporting elsewhere too.
An EU business selling to the UK is probably exporting elsewhere too.
7/ In practice, this means that your average EU politician has a much lower concentration of businesses and workers in their district reliant on trade with the UK, than the average UK politician.
So the pressure is lower.
So the pressure is lower.
8/ This isn't the only reason the trade deficit hasn't broken the EU's will as predicted, but it's probably the simplest one to explain.
Others include where precisely likely tariffs will fall, competitiveness margins, the sustainability of EU goods, etc etc.
Happy arguing!
Others include where precisely likely tariffs will fall, competitiveness margins, the sustainability of EU goods, etc etc.
Happy arguing!
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