Before reading any further, try to answer this quiz question:
How much does the financial services sector contribute to GDP?
We frequently hear it said that the British economy is
dominated by services. Indeed, in the debate in parliament on 30 December both Kier
Starmer and Rachel Reeves claimed that services account for 80% of our economic
output. Leaders of other parties also referenced this same number. This figure
is accurate enough but still misleading in the context of a discussion about
trade. Where trade is concerned services are the junior partner. World Trade Organisation
data suggest that trade in goods makes up about 63% of UK trade.[1]
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| Motor vehicle repair needed |
Financial services is a very profitable industry. It can
afford to splash a bit of money on lobbyists and one reason that the 80% figure
is well known is that apologists for finance tend to promote it. An impressive
statistic serves their agenda even if it creates a false impression that
finance is typical of services. This is misdirection which takes our attention
away from the true scale of the sector’s contribution.
To answer the quiz question I have prepared this table. It
shows a breakdown of gross value added by industrial sector using data from
Eurostat[2].
Naturally, services are more than one sector. In the table they are the
categories from G to T.
|
A Agriculture,
forestry and fishing |
0.5% |
|
B Mining and quarrying |
0.9% |
|
C Manufacturing |
10.0% |
|
D Electricity, gas, steam and air conditioning
supply |
1.0% |
|
E Water supply; sewerage, waste management and
remediation activities |
1.3% |
|
F Construction |
6.1% |
|
G Wholesale and retail trade; repair of motor
vehicles and motorcycles |
11.9% |
|
H Transportation and storage |
3.3% |
|
I Accommodation and food service activities |
2.8% |
|
J Information and communication |
7.9% |
|
K Financial and insurance activities |
6.4% |
|
L Real estate activities |
14.0% |
|
M Professional, scientific and technical
activities |
9.0% |
|
N Administrative and support service activities |
6.4% |
|
O Public administration and defence; compulsory
social security |
4.0% |
|
P Education |
4.9% |
|
Q Human health and social work activities |
7.9% |
|
R Arts, entertainment and recreation |
1.3% |
|
S Other service activities |
1.5% |
|
T Activities of households as employers etc. |
0.3% |
To find the answer to the quiz question, look at category K.
Updated: 10/1/21 to simplify the table.
[1] My
calculations based on data in UK trade profile. https://www.wto.org/english/res_e/statis_e/daily_update_e/trade_profiles/GB_e.pdf
