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PERSPECTIVES
By Ruth Lea, Economic Adviser to the Arbuthnot Banking Group
The Authorities begin to
get to grips with Brexit:
post-referendum update
Ruth Lea
Economic Adviser
Arbuthnot Banking Group
[email protected]
07800 608 674
18th July 2016
Introduction: a new Prime Minister and a new Chancellor
Since our last Perspective there have been momentous political events. Rather
unexpectedly, Theresa May assumed the office of Prime Minister on Wednesday 13 July,
after her final opponent withdrew from the Conservative leadership contest on the previous
Monday. The markets, having effectively factored in two months of political uncertainty,
reacted with relief on the appointment. Her key economic appointments have been Philip
Hammond as the new Chancellor, David Davis as Secretary of State for Leaving the
European Union (a new post), Liam Fox as Secretary of State for International Trade (also a
new post) and Greg Clark at a revamped department for Business, Energy and Industrial
Strategy. The Department for Energy and Climate Change (DECC) was abolished.
It is, of course, very early days in the new administration but the new Chancellor has already
made it very clear that there will be no “emergency Budget” and both he and the new Prime
Minister have dropped the budget surplus objective by 2020.1,2 In addition, Mr Hammond
has indicated that he stands ready to “borrow and invest” (borrowing costs are at all-time
lows) following the Brexit “shock” to the economy.3 But we will probably have to wait until
the Autumn Statement for any substantive statements on this issue. The Government is,
however, beginning to get to grips with Brexit. As Mr Hammond has said:4
 “There is no plan for an emergency budget, as Theresa May made clear. There will be an
Autumn Statement in the normal way and then there will be a Budget in the normal
way. But the markets do need signals of reassurance, they need to know we will do
whatever is necessary to keep the economy on track.”
1
Developments in monetary policy
The Bank is also adjusting to Brexit. Prior to the MPC meeting of 14 July, the Bank Governor
gave a very strong hint that there was likely to be monetary easing in the near-term, though
there have to be doubts that a further cut in interest rates would do much to stimulate
economy.5 In a speech on 30 June, he said that a “deteriorating outlook” meant that some
monetary easing would “likely be required over the summer”.6 And, as if to underscore the
UK’s potential economic fragility, he voiced concerns (somewhat apocalyptically) that risks
to financial stability had begun to “crystallise” in his opening remarks at the recent Financial
Stability Report press conference.7-9 He then announced a measure to boost potential bank
lending. Regulatory capital buffers would be reduced by £5.7bn, which would raise banks’
capacity to lend to UK businesses and households by up to £150bn.
It was, therefore, a surprise to the markets that the MPC announced no change in interest
rates at their meeting of 15 July.10 Eight members voted to keep the Bank Rate at 0.5%
(including the Governor) and just one (Gertjan Vlieghe) voted to cut the rate (to 0.25%). The
pound, accordingly, firmed. But it is clear that the chances of a rate cut (and/or some other
form of easing, for example, more QE) at the next MPC meeting (4 August), which coincides
with the August Inflation Report, are extremely high. The key paragraphs in the MPC
minutes indicating the mood of the meeting were:
 The MPC was committed to taking whatever action was needed to support growth and
to return inflation to the target over an appropriate horizon. To that end, most members
of the Committee expected monetary policy to be loosened in August (paragraph 35).
 The Committee reviewed a range of possible stimulus measures and combinations
thereof. It considered the potential interaction between various measures and the
financial system, and therefore their influence on output and inflation. Committee
members had an initial exchange of views on various possible packages of measures
(paragraph 36).
 The exact extent of any additional stimulus measures would be based on the
Committee’s updated forecast. Their composition would take account of any
interactions with the financial system and their effectiveness in supporting the domestic
economy. Further detailed analysis across all policy areas of the Bank would be required.
(paragraph 37)
The Bank’s Chief Economist Andy Haldane has also been hinting strongly that more easing
was to come. In a recent speech he said:11
 I would rather run the risk of taking a sledgehammer to crack a nut than taking a
miniature rock hammer to tunnel my way out of prison. …in my personal view, this
means a material easing of monetary policy is likely to be needed, as one part of a
collective policy response aimed at helping protect the economy and jobs from a
downturn. Given the scale of insurance required, a package of mutually-complementary
monetary policy easing measures is likely to be necessary. And this monetary response,
if it is to buttress expectations and confidence, needs I think to be delivered promptly as
well as muscularly. By promptly I mean next month, when the precise size and extent of
the necessary stimulatory measures can be determined as part of the August Inflation
Report round.
2
The markets have clearly factored in another rate cut, as shown in the latest yield curve
(chart 1), and expect rates to stay at historic lows for at least five years.
Chart 1 UK instantaneous nominal forward curve (overnight index swap rates (OIS), %),
months out to 60 months, at selected dates
3
13-Jun-14
2.5
16-Jul-15
2
05-Nov-15
12-Feb-15
1.5
28-Jan-16
1
0.5
14-Jul-16
0
1
4
7
10
13
16
19
22
25
28
31
34
37
40
43
46
49
52
55
58
Source: Bank of England, webpage on yield curves.
The economic impact of the Brexit vote
In both the run-up to the Brexit vote on 23 June and subsequently, the impact of the Brexit
has been much discussed though, arguably, generating more heat than light. Whilst we have
little doubt that the vote has triggered uncertainties in the economy generally and the
markets more specifically, it is impossible to know with any precision what can be directly
attributable to the vote and what would have happened anyway. There are a multitude of
other influences including concerns over Italian banks and Chinese GDP growth (though GDP
was reported as growing by 6.7% (YOY) in 2016Q2)12, and when the Fed may raise rates
again. One can never know the “counter-factual”.13 Under these circumstances, one should
be wary of attributing every adverse economic or market twitch to Brexit thus, arguably,
“blaming it all on Brexit”.
There is still a paucity of information on how the UK economy is reacting to the referendum
result. And, in any case, when more figures are published, interpretation will be complicated
by extraneous factors, such as the poor summer weather. But there is little doubt that
confidence indicators have weakened since the referendum, which may lead to postponed
investment projects and/or a fall in consumer spending. For example, UK consumer
confidence “collapsed” in the wake of the Brexit vote, according to a survey by YouGov and
3
the Centre for Economic and Business Research (CEBR) and the RICS UK Residential Market
Survey for June 2016 suggested that post-Brexit vote uncertainty had resulted in a marked
drop in activity in the housing market.14-15 Most of the responses to the most recent Markit
surveys (for June) were received before the Brexit vote, but there was some evidence that
the weaker outcomes for the construction and services sectors were partly attributable to
uncertainty ahead of the vote.16-17 Interestingly prospects improved for the manufacturing
sector in June.18
There have been few hard ONS data released since the Brexit vote and, of those that have
been released, they typically lag events by a couple of months. Thus construction output for
May, which fell 2.1% (MOM) to be 1.9% down on a year earlier, was released last week. 19
The ONS will not be releasing GDP data for 2016Q2 (preliminary estimate) until 27 July and
data only start coming in for the months of the third quarter in mid-August. There will not
be a GDP estimate for 2016Q3 until end-October (see annex table 1). In other words, there
are weeks, if not months, of waiting before we know just how the economy is performing in
the wake of the Brexit vote.
Turning to key market indicators, the pound firmed last week on the political news as well
as the MPC’s decision not to raise interest rates. As can be seen from chart 2 the pound was
down to £/$1.32 by 15 July, compared with around £/$1.45 in the weeks leading up to the
referendum. This represents a depreciation of around 9%, a fair competitiveness boost – not
a rout. Stock markets have been remarkably solid. The FTSE100 was comfortably above its
pre-referendum level last week, and even the FTSE250 had recovered most of its postreferendum losses.
Chart 2 End-week exchange rates, 19 February 2016 to 15 July 2016: £/$, £/€
1.5
1.45
1.4
1.35
£/$
1.3
1.25
£/€
1.2
£/$
£/€
Sources: (i) BoE database (spot rates) to 8 July 2016, (ii) BBC website for 15 July 2016.
4
15/07/2016
08/07/2016
01/07/2016
24/06/2016
17/06/2016
10/06/2016
03/06/2016
27/05/2016
20/05/2016
13/05/2016
06/05/2016
29/04/2016
22/04/2016
15/04/2016
08/04/2016
01/04/2016
25/03/2016
18/03/2016
11/03/2016
04/03/2016
26/02/2016
19/02/2016
1.15
Timetable for Brexit: Brexit Day to be 1 January 2019?
Even though Theresa May’s appointment as Prime Minister did much to calm political
uncertainty last week, there remain major uncertainties about the timetable for Brexit. In
our last Perspective we suggested that “Brexit Day” could be on or before 1 January 2019 as
a working assumption.20 This would seem in line with early comments made by Brexit
Minister David Davis who has said last week the UK should be able to formally trigger its
departure from the EU (invoking Article 50 of the Lisbon Treaty) “before or by the start of
next year”, with a likely exit from the EU around December 2018.21 International Trade
Minister Liam Fox has suggested that “Brexit Day” could be 1 January 2019.22 In the
meantime, the country will simply have to adjust to the uncertainties leading up to leaving
the EU.
David Davis has also said that the “first order of business” should be to strike trade
agreements with non-EU countries, even though they cannot be signed until the UK has left
the EU.23 This is most encouraging as a key advantage of Brexit will be the UK’s ability to
negotiate its own trade agreements with favoured trading partners, including the US, Japan,
China and Commonwealth countries.24 There are already encouraging signs that Australia
and Canada, to name but two, are very positive about agreeing bilateral trade deals.25-26
The Commonwealth: an underused resource
The prospect of deals with Australia and Canada is a timely reminder of the economic
potential of closer relationships between a post-EU UK and the other members of the
Commonwealth. As we have discussed on previous occasions, the Commonwealth has been
an underused resource, relatively neglected as the UK’s focus has been the EU for the last
40+ years.27-28
Commonwealth countries taken together, as an economic entity, are rarely discussed. Yet
they account for over 17% of world GDP (Purchasing Power Parity (PPP) terms, chart 3a and
annex table 2a) and contain over 2 billion of the world’s 7 billion people. The modern 53member Commonwealth spans five continents and contains developed, emerging and
developing economies. It also comprises some of the world’s largest economies and several
of the smallest. In its diversity it captures the character of the 21st century globalised
economy as no other economic grouping can. The Commonwealth’s membership includes
two of the world’s largest ten economies (the UK and India), two members of the G7
(Canada and the UK) and five members of the G20 (the UK, India, Canada, Australia and
South Africa). The Commonwealth has global significance and huge potential.
Apart from its sheer size there are three factors which are relevant to trade:
 The countries have favourable demographics and growth prospects. They are set to be
the growth markets of the future, alongside the US, China (albeit after its slowdown)
and other buoyant economies. Specifically, the Commonwealth’s demographics
compare very favourably with several major European countries, where working
populations will age and shrink.
5


Secondly, because of shared history and commonalities of language, law and business
practice, it has been estimated that Commonwealth countries trading with one another
experience business costs 10-15% lower than similar dealings with non-Commonwealth
countries of comparable size and GDP. This has been called the “Commonwealth
advantage”.29
Thirdly, the Commonwealth also has the advantage of being a group of friendly (nonthreatening and non-adversarial) countries which includes many with deep reserves of
key natural resources.
Crystal ball gazing is a risky business. But, insofar as it shows the changing relative economic
significance of the Commonwealth compared with the EU, the US and China, it is a useful
exercise. Chart 3a shows how the world economy has changed since 1980 in PPP terms and
is expected to change until 2021 (the final year of the IMF’s current forecasts). In 1980 the
EU28 countries accounted for over 30% of world GDP, whilst the Commonwealth
contributed nearly 15%, the US nearly 22% and China just over 2%. By 2015 the EU28’s
share had dropped to 16%, a smidgen ahead of the US, whilst the Commonwealth has
increased its share to 17%, on a par with China, which has shown simply staggering growth
over the past 30 years. Commonwealth GDP had, therefore, overtaken both the EU and the
US by 2015. And according to the IMF, China and the Commonwealth will continue to pull
ahead, not least of all because of the expected buoyant growth in India.
The PPP data, of course, are just one way of measuring GDP. The other measure is in market
exchange rates (MERs, chart 3b). They both have their strengths and weaknesses. PPP data
allow for the relative prices of goods and services (particularly non-tradeables) within an
economy and are, therefore, the better overall measures of the internal, domestic
“purchasing power” in a country. But MER GDP data provide a better measure of a country’s
international purchasing power, so relevant for international trade, than PPPs. MER data
have, of course, the disadvantage of being subject to exchange rate fluctuations. And
exchange rates can fluctuate wildly. Currencies can, for example, be “overvalued” or
“undervalued” for considerable periods of time. Chart 3b shows that a strong US dollar in
2000 noticeably “boosted” the US’s share in MER terms.
Developed countries tend to have a lower GDP in PPPs than in MERs, whilst emerging
market and developing countries tend to have a higher GDP in PPPs than in MERs. For
example, UK GDP in 2015 was $2,679bn (in PPP terms) but $2,849bn (in MER terms), whilst
India’s GDP was $7,965bn (PPPs) but $2,091bn (MERs). But note that, as countries get
richer, their currencies tend to appreciate and MER GDP estimates tend to converge with
the PPP GDP estimates, thus lessening the advantage that developed countries currently
have over emerging economies in terms of international purchasing power. (Annex tables 2a
and 2b provide selected PPP-MER comparisons.)
6
Chart 3a Shares of world GDP (PPP terms), %
35
30.2
30
23.7
25
21.9
20.8
19.8
20
14.7
16 15.8
14.6
15
10
18.8
17.1 17.1
15.3 14.6
7.4
5
2.3
0
1980
2000
EU28
2015
US
China
2021f
Commonwealth
Chart 3b Shares of world GDP (MER terms), %
40
35
33.8
30.9
30
26.5
25.8
24.5
25
23.6
22.2
20.3
18.4
20
15
13.4
15
14.5
14
11.8
10
5
3.6
2.7
0
1980
2000
EU28
2015
US
China
2021f
Commonwealth
Source: IMF, World Economic Outlook, database, April 2016. See annex tables 2a and 2b.
Turning to trade, chart 4a provides UK bilateral trade data with selected Commonwealth
countries, selected EU countries, the US and China.30 It shows that UK trade with our major
Commonwealth partners is still relatively modest compared with the EU. This is not, of
course, surprising given the relative size and wealth of many of the EU’s members. There
should, however, be scope for some “catching up” with the Commonwealth post-Brexit. UKCommonwealth trade is also modest relative to the US (especially) and China.
7
Chart 4b shows that in the decade to 2014 UK exports to Commonwealth countries grew, if
anything, a little slower than for the world and, thus, the Commonwealth’s share slipped
back, albeit modestly (see annex table 3). Nevertheless, trade with India was buoyant and
overall Commonwealth trade (61%) grew faster than for the EU (44%). The really startling
feature of this chart was the explosive growth of exports to China (albeit from a low base).
Chart 4a UK trade in goods and services, £bn, selected countries, 2014
100
80
60
40
20
0
Au
Ca
na
da
str
a
lia
-20
In
Sin
dia
ga
So
po
re
ut
hA
Fr
fri
ca
an
Ge
rm
ce
Ire
lan
an
y
US
Ch
i
d
na
-40
Exports
Imports
Balance
Chart 4b UK exports in goods and services, growth between 2004 & 2014 (%)
400
368
350
300
250
200
144
150
100
69
61
47
50
44
40
23
43
20
68
61
40
0
W
na
ld
or
i
Ch
US
nd
la
Ire
a
ea
ric
y
an
ce
an
rm
Ge
Fr
28
EU
Af
e
or
ap
h
ut
So
ng
Si
a
di
In
da
na
Ca
lia
w
on
m
ra
st
Au
m
Co
lth
)
(8
Growth, 2004-14 (%)
Growth, 2004-14 (%)
Source: ONS, UK Balance of Payments, the Pink Book, 2015 edition. See annex table 3 for the
calculations.
8
References
1. Daily Telegraph, “Theresa May rules out tax rises as she launches her bid to become Prime
Minister”, 30 June 2016.
2. FT, “Osborne puts corporation tax cut at heart of Brexit plan”, 4 July 2016. Ex-Chancellor
Osborne suggested that he might cut the main rate of corporation tax to 15% in early July.
Whether Mr Hammond will take this route is unknown at present. The March 2016 Budget cut
CT main rate to 17% in 2020 (this was an additional 1% cut on top of the previously announced
CT main rate cuts which reduced the CT main rate to 18% from April 2020.)
3. Daily Telegraph, “We must act now to cut Brexit risk, says Bank”, 16 July 2016.
4. Daily Mail, “New Chancellor Philip Hammond says ‘Britain is open for business’ and promises
there will NOT be an emergency Brexit budget threatened by Osborne”, 14 July 2016.
5. Bank of England, “Uncertainty, the economy and policy”, Speech given by Mark Carney,
Governor of the Bank of England, 30 June 2016.
6. Patrick Hosking, “It’s time for the Bank’s governor to pause on monetary orthodoxy”, Times, 13
July 2016 argued that there was a strong case for fiscal stimulation, especially investment
spending. (But) monetary loosening didn’t work beyond a certain point and the evidence was
that we were at that point now. There were limitations to the impact on mortgages…and savers
would be worse off. Businesses might be able to borrow more cheaply, though the problem here
was not a lack of credit supply but a lack of demand. Banks would face a further margin
squeeze…and there would be an impact on defined-benefit pension schemes.
7. Financial Stability Report Press Conference, Tuesday 5 July 2016, Opening Remarks by the
Governor.
8. Bank of England, “Financial Stability Report”, 5 July 2016.
9. BBC, “Bank of England warns Brexit risks beginning to crystallise”, 5 July 2016.
10. Bank of England, Monetary Policy Summary and minutes of the Monetary Policy Committee
meeting ending on 13 July 2016, 14 July 2016.
11. Bank of England, “Whose Recovery?”, Speech given by Andrew G Haldane, Chief Economist,
Bank of England, 15 July 2016.
12. CNBC, “China Q2 economic growth beats estimates as stimulus shores up demand”, 15 July
2016.
13. Hamish McRae, “Truth about the downturn”, Daily Mail, 9 July 2016, noted that “the British
commercial property market was weakening long before the present rumpus”, referring to the
fact that M&G Investments had followed two other major finance firms (Aviva and Standard
Life), in suspending trading in their commercial property fund following the Brexit vote (see BBC,
“M&G and Aviva suspend property funds following Brexit vote”, 5 July 2016). Though note that
Aberdeen Asset Management lifted the suspension of its multi-billion UK commercial property
fund later in July (BBC, “Aberdeen lifts property fund suspension”, 13 July 2016.)
14. Independent, “Brexit sees consumer confidence crash, YouGov poll shows”, 30 June 2016.
15. RICS, “Brexit uncertainty hits residential activity”, 14 July 2016.
16. Markit/CIPS construction PMI, “UK construction PMI signals weakest performance for 7 years in
June”, 4 July 2016.
17. Markit/CIPS services PMI, “UK services expansion weakens in June & outlook darkens”, 5 June
2016.
18. Markit/CIPS manufacturing PMI, “Manufacturing PMI at 5-month high in June, 1 July 2016.
19. ONS, “Construction output: May 2016”, 15 July 2016.
20. Ruth Lea, “Post-Brexit trading options for the UK”, Arbuthnot Banking Group, 4 July 2016.
21. BBC, “David Davis: Trigger Brexit by start of 2017”, 15 July 2016.
22. Huffington Post, “Brexit EU migrants ‘might be sent back’ if there’s a surge, David Davis says”, 17
July 2016.
23. BBC, “David Davis: Trigger Brexit by start of 2017”, 15 July 2016.
9
24. Ruth Lea, “Post-Brexit trading options for the UK”, Arbuthnot Banking Group, 4 July 2016.
25. BBC, “UK offered Brexit free trade deal with Australia”, 17 July 2016.
26. Daily Mail, “Brexit won’t be barrier to trade deal, says Canada”, 16 July 2016, reported that
Canada’s trade minister Chrystia Freeland had said that Montreal was keen for the UK to
piggyback on a comprehensive free trade deal between the EU and Canada, which is set to be
implemented next year. She was keen to ensure a seamless transition in its dealings with the UK.
27. Ruth Lea, “Commonwealth countries are the growth markets of the future”, Arbuthnot Banking
Group, 20 December 2011.
28. Ruth Lea, “There’s more to the Commonwealth than the Games”, Arbuthnot Banking Group
Perspective, 14 August 2014.
29. Sarianna Lundan and Geoffrey Jones, “The ‘Commonwealth Effect’ and the process of
internationalisation”, in the World Economy, January 2001.
30. These data are based on conventional trade accounts and, as such, do not allow for the role of
intermediate imports in exports (for example), as the OECD’s Trade in Value Added (TiVA)
analysis does. (TiVA analysis reduces the EU’s share of UK trade & increases the US’s for
example.) See Ruth Lea, “The OECD-WTO “trade in value-added” research: a break-through in
analysing world trade”, Arbuthnot Banking Group, 17 February 2014. But they are the only
timely trade data readily available.
10
Annex
Table 1 ONS statistical releases & BoE releases. ONS unless otherwise stated
Date
19 July
19 July
20 July
21 July
21 July
27 July
27 July
29 July
4 August
4 August
9 August
9 August
12 August
16 August
16 August
17 August
18 August
19 August
26 August
26 August
30 August
7 September
9 September
9 September
13 September
13 September
14 September
Release
CPI, PPI (June)
House prices (May)
Employment, unemployment, earnings (3 months
to May)
Public sector finances (June)
Retail sales (June)
GDP (2016Q2, preliminary estimate)
Services (May)
Money & credit (June), Bank of England
Inflation report, Bank of England
MPC minutes (August), Bank of England
UK trade (June)
Index of production (June)
Construction output (June)
CPI, PPI (July)
House prices (June)
Employment, unemployment, earnings (3 months
to June)
Retail sales (July)
Public sector finances (July)
GDP (2016Q2, 2nd estimate)
Services (June)
Money & credit (July), Bank of England
15 September
15 September
21 September
30 September
30 September
30 September
29 September
Index of production (July)
UK trade (July)
Construction output (July)
CPI, PPI (August)
House prices (July)
Employment, unemployment, earnings (3 months
to July)
Retail sales (August)
MPC minutes (September), Bank of England
Public sector finances (August)
Services (July)
GDP (National Accounts, 2016Q2)
Balance of Payments (2016Q2)
Money & credit (August), Bank of England
7 October
7 October
14 October
18 October
UK trade (August)
Index of production (August)
Construction output (August)
CPI, PPI (September)
11
2016Q2
2016Q2
2016Q2
2016Q2
2016Q3
2016Q2
2016Q2
2016Q2
2016Q2
2016Q2
…
…
2016Q2
2016Q2
2016Q2
2016Q3
2016Q2
2016Q2
2016Q3
2016Q3
2016Q2
2016Q2
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
…
2016Q3
2016Q3
2016Q2
2016Q2
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
18 October
19 October
20 October
21 October
27 October
27 October
31 October
House prices (August)
Employment, unemployment, earnings (3 months
to August)
Retail sales (September)
Public sector finances (September)
Services (August)
GDP (2016Q3, preliminary estimate)
Money & credit (September), Bank of England
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
2016Q3
Sources: (i) ONS website, (ii) Bank of England website (there is no MPC meeting in October).
Table 2a GDP (PPP, $bn), Commonwealth (C53), EU28, US & China
1980
2000
2015
2021f
C’wealth “top 12” (C12):
India
United Kingdom
Canada
Australia
Nigeria
Pakistan
Malaysia
South Africa
Bangladesh
Singapore
Sri Lanka
New Zealand
Total C12
All C’wealth (C53) = C12x1.055
382.0
491.3
287.3
154.5
147.7 (1990)
71.8
45.8
134.8
42.1
21.4
15.0
27.6
1821.3
1920.1
2077.8
1539.0
910.9
550.7
279.7
368.9
300.5
346.1
180.2
164.9
75.3
84.5
6878.5
7256.8
7965.2
2679.3
1631.9
1138.1
1091.7
931.0
815.6
723.5
576.5
471.9
223.0
168.2
18415.9
19428.8
13754.0
3376.6
2031.7
1495.9
1494.8
1392.0
1202.3
897.5
950.2
606.4
332.2
214.3
27747.9
29274.0
EU28
USA
China
3939.1
2862.5
302.8
11735.7
10284.8
3660.7
19205.4
17947.0
19392.4
23837.5
22765.7
30777.2
World GDP
Shares of world GDP:
C53 share
EU28 share
US share
China share
13,054.6
49,541.5
113,523.5
155,751.6
14.7%
30.2%
21.9%
2.3%
14.6%
23.7%
20.8%
7.4%
17.1%
16.0%
15.8%
17.1%
18.8%
15.3%
14.6%
19.8%
12
Table 2b GDP (MERs, $bn), Commonwealth (C53), EU28, US & China
1980
2000
2015
2021f
C’wealth “top 12” (C12):
United Kingdom
India
Canada
Australia
Nigeria
South Africa
Malaysia
Singapore
Pakistan
New Zealand
Bangladesh
Sri Lanka
Total C12
All C’wealth (C53) = C12x1.043
565.0
189.4
273.0
162.8
36.0 (1990)
83.0
26.4
12.1
30.9
22.5
22.6
4.4
1428.1
1489.5
1554.9
476.6
742.3
397.1
61.3
136.5
100.7
95.8
79.7
54.1
54.6
16.9
3770.5
3932.6
2849.3
2090.7
1552.4
1223.9
490.2
313.0
296.2
292.7
270.0
172.2
205.7
82.1
9838.4
10261.5
3373.9
3660.2
1803.9
1535.8
759.4
323.3
531.3
347.3
270x1.5=405.0
216.1
347.8
123.7
13427.7
14005.1
EU28
USA
China
3755.4
2862.5
302.9
8829.6
10284.8
1208.8
16220.4
17947.0
10982.8
19610.2
22765.7
17762.0
World GDP
Shares of world GDP:
C53 share
EU28 share
US share
China share
11,098.7
33,304.3
73,171.0
96,387.3
13.4%
33.8%
25.8%
2.7%
11.8%
26.5%
30.9%
3.6%
14.0%
22.2%
24.5%
15.0%
14.5%
20.3%
23.6%
18.4%
Source: IMF, World Economic Outlook database, April 2016. The 2021 MER figure for Pakistan =
2015 figure x 1.50 (2021/2015 growth for PPPs GDP). 1980 data not available for Nigeria.
The C53 totals are calculated as the C12 total x 1.055 for PPPs and C12 total x 1.043 for MERs (these
proportions are taken from Ruth Lea, “There’s more to the Commonwealth than the Games”,
Arbuthnot Banking Group Perspective, 14 August 2014.)
Table 3 UK exports of in goods and services, £bn, 2004, 2014
Commonwealth, selected
countries:
Australia
Canada
India
Malaysia
New Zealand
Pakistan
Singapore
2004
2014
Growth between
2004 & 2014 (%)
4.9
5.2
3.6
1.6
0.8
0.6
3.8
8.3
6.4
8.8
2.5
1.0
1.1
5.6
69%
23%
144%
56%
25%
83%
47%
13
South Africa
Sub-total
3.0
23.5 (7.7%)
4.2
37.9 (7.4%)
40%
61%
EU28:
Of which:
France
Germany
Ireland
159.4 (52.0%)
228.9 (44.4%)
44%
25.4
30.4
19.9
30.6
43.4
27.9
20%
43%
40%
US
Japan
China (PRC)
World total
54.6 (17.8%)
7.9 (2.6%)
4.0 (1.3%)
306.3
88.0 (17.1%)
10.1 (2.0%)
18.7 (3.6%)
515.2
61%
28%
368%
68%
Source: ONS, UK balance of payments, Pink Book, 2015 edition.
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