February 14, 2020
By James Wells
THIS WEEK Liz Truss, Secretary of State at the Department for International Trade, posted a Tweet claiming 2019 was a “record breaking year for UK exports”, quoting a total export value of £689 billion and 5.0 per cent growth from 2018.
At this point fellow Brexiteers are jumping for joy, proclaiming “a record-breaking year for UK trade despite all of the fearmongering from those pesky remainers!”.
Now before I burst the trade secretary’s bubble, I must add that my argument is not about the performance of our exports per se, but how the figures are communicated, and which figures are chosen to present to the public.
There are two problems with the trade secretary using the term record breaking. Firstly, she has chosen to quote figures using a measure that includes the impact from inflation, and secondly, the data also includes trade in precious metals that in turn include non-monetary gold (NMG). I will explain why this is controversial below, but importantly, removing both of these from the data results in growth of around 1.5 per cent. Record breaking indeed Liz?
So firstly, the trade secretary quoted the figures in current prices. For those of you not familiar with this term, the key thing is that no adjustment to remove the effects of inflation has taken place. Now apart from when the economy experiences deflation or stagflation, which are fairly rare occurrences thankfully, prices can be expected to rise over time. This means the exact same quantity of goods and services sold by the UK last year will generally be worth more today.
If trade figures are reported using current prices, then it is highly likely that annual figures will be larger in subsequent years, regardless of whether more goods and services have been exported. According to the Office for National Statistics (ONS), which produces and publishes the government’s official trade figures, eight annual periods over the past decade were the largest on record when they were published.
When nearly every year is record breaking because inflation is included in the numbers, it is totally disingenuous to sing from the rooftops that we have seen record breaking trade figures. Yet year after year we see the same claims from trade secretaries. Last year it was Dr Liam Fox, this year it is Liz Truss.
It is very telling that our statisticians at the ONS do not report the figures as ‘record breaking’ in their regular reports. Of course, the ONS does not have a minister in charge. It is instead regulated by the UK Statistics Authority so that the public can be confident that ministers have not interfered in the production of official statistics.
The trade secretary also said UK exports grew by 5.0% between 2018 and 2019, again using current prices. As well as producing trade figures in current prices, the ONS publishes figures with the effects of inflation removed. This figure is obviously lower because the impact of inflation on prices is absent. The ‘real’ figure for UK export growth in 2019 was therefore 3.7 per cent.
The second point which makes a mockery of the claim that the figures are record breaking is the inclusion of precious metals in the figures, which includes NMG. Deputy National Statistician Jonathan Athow describes NMG as a nightmare in his recent blog  in the National Statistical. In the article Jonathan talks about how trade in NMG is more like trade in stocks and shares and therefore not equivalent to most other types of trade flows. The ONS is so worried about NMG distorting our trade figures that it has just announced it will now publish trade figures excluding precious metals.
If precious metals are removed from the figures then UK exports grew by 2.9 per cent in 2019, not the 5.0 per cent quoted by the trade secretary. Unfortunately, the ONS does not produce a figure excluding both precious metals and the impact from inflation, but if it did the figure would most likely be somewhere in the region of 1.5 per cent.
Does it really matter if the government is liberal with its use of official data? The Wikipedia entry for “lies, damned lies, and statistics” describes the phrase as “the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.” My view is that the use of statistics by government says a lot about the confidence of that government in itself, or lack of it.
There is a great scene from Yes Minister that takes a more cynical view, however. In it Sir Humphrey says, “if local authorities don’t send us the statistics that we ask for, then government figures will be a nonsense”, “why” asks James Hacker, “ they will be incomplete” says Sir Humphrey, “but government figures are always a nonsense” says James Hacker, to which Bernard concludes “I think Sir Humphrey wants to ensure they are a complete nonsense”.
As the UK takes its first steps as an independent trading nation once again, we need honesty from ministers about how our nation is performing. The ONS and Department for International Trade are currently spending millions of tax-payers money to improve official trade data. It is therefore vital that the public is not misled by ministers who are keen to spin how well their department is performing.
 https://blog.ons.gov.uk/2020/02/10/its-indestructible-but-can-we-always-believe-in-the-uk-trade- figures-with-the-disaggregated-effect-of-the-international-trade-in-non-monetary-gold/
James Wells is a former Brexit Party MEP and member of the International Trade Committee (INTA) in the European Parliament. Prior to that James was Head of UK Trade at the Office for National Statistics, in charge of the teams that publish the UK’s official trade figures; before working on trade James was Head of Inflation statistics for manufacturing and services, also at the Office for National Statistics.
Image by TeroVesalainen from Pixabay