Saturday, 12 March 2016

A zero sum game?

UK trade deficit narrows in January
The UK's trade deficit narrowed in January, official figures show, but its goods trade gap with the EU widened to a record level. 
The Office for National Statistics (ONS) said the total trade deficit - covering goods and services - shrank to £3.5bn from £3.7bn in December. 
The deficit in goods alone narrowed to £10.29bn - down from £10.45bn the previous month. 
However, the goods trade deficit with the EU widened to £8.1bn, from £7.4bn. 
Trade with the EU is coming under more attention because of the UK referendum on EU membership on 23 June.
Of course what is nice and easy about a zero sum situation is that you can present it in many different ways. One minus one plus one less one divided by 28 times 189 (or however many nations there are) being zero, and all that boring stuff.
So, if the trade deficit narrowed in January, but the goods trade gap with the [presumably the rest of the] EU widened, then either the non-goods trade gap with the rest of the EU was in the UK's favour or the goods-and-services gap with the world beyond the EU was in the UK's favour, or possibly a bit of both.
Any which way, the last bit of the cited article is highly relevant, because it highlights how little analysis our national broadcaster has publicised. We simply do not know from what is stated in the bit quoted whether our overall position with regard to the rest of the EU is better or worse than it was before. If we bought a stack of cars from Wolfsburg and Barcelona but sold two stacks of legal services, financial products, consultancy advice and accountancy services as well as a stack of cars from Sunderland back, then the numbers quoted by the article would look really bad. My guess, given how neutral the BBC is, is that we overall sent more stuff* to the rest of the world and provided more demand from our sclerotic neighbours.
* we, the people of the United Kingdom of Great Britain and Northern Ireland, really are rather good at selling high value services around the world.
In other totally unrelated news, it turns out that sacking all the nation's best statisticians and hiring cheap ones out in the sticks and not updating statistical methods during a period of information explosion may have left us with a vaguely unreliable set of economic performance data.


Nick Drew said...

Your throwaway ONS link at the end there is Absolutely Appalling, BE

Stats are one of those unsung things it's really important to be good at, it's possible to be very bad at, and one at which I would innocently have guessed we were very good at indeed (we certainly were once, it helped us win WW2)

I once sat next to Elliot Richardson at dinner, a very fine fellow: he opined that one of the very few legitimate roles of government was the gathering and neutral presentation of statistics, because (a) info / knowledge etc is vital for democracy and (b) only government can poke its nose authoritatively in all the necessary places

Demetrius said...

The Enlightened Economist, Diane Coyle, posted on this today. I commented that it was not before time that the stat's should be overhauled. My view is that they have been going adrift for some time. It will not be an easy job and made tricky by ongoing change and unpredictables.

BE said...

At the same time as compiling better stats, can we also get better at ignoring them?

andrew said...

80% better than we were recently.


Newport... was the relocation a deliberate plot to gut the ONS?

What about Warwick / Lancaster / Manchester / Edinburgh / Southampton
- All good size university towns (the ONS's natural recruitment base), reasonable places to live, reasonable links to other places
and all of Warwick / Lancaster / Manchester / Edinburgh / Southampton are in the world top 100 for stats/or (as well as oxbridge/lse/ic)

Anonymous said...

As someone that actually did this for a living for a short time, there was and may still be a floor at the VAT building in Southend where a load of underpaid desk jockeys would check customs documentation for errors - wholly to prevent duty and tax evasion. The statistics part of it was simply a reuse of the data and not an end in itself.

The ONS guys would use the raw data and smooth it for the odd shipment of diamonds or oil as these would disrupt the overall picture of the health of the trade balance. The numbers are smoothed and adjusted enough to be meaningless.

What should be praised is the dedication that HMRC took not to get accurate data but to maximise UK plc's income.

Sebastian Weetabix said...

We should just hire the Tesco market research team in Cheshunt. They know everything!