Riyadh via Guernsey: the strange journey of British exports
Imagine for a moment that tiny Jersey and Guernsey were consuming British goods and services on a similar scale to Spain, which has a population nearly 300 times that of the Channel Islands.
It works out an unlikely sounding £85,000 per head.
That was exactly what the UK’s official statisticians thought was happening until last October: Channel Islanders were spending vast sums on UK services, making them among one of the biggest customers on the planet.
And then a funny thing happened. I say funny, but some may find it a bit concerning.
Buried in the vast thicket of spreadsheets and tables that the Office for National Statistics calls the Pink Book, the official estimate for 2017 exports to the Channel Islands was 60 per cent lower than in the previous edition of the Pink Book. The estimate for 2016 was cut by two-thirds. And so on — in total about £24 billion disappeared from exports to the Channel Islands over a number of years in between the October 2018 and October 2019 editions of the Pink Book.
What lay behind such an enormous and unique revision? Services, said the ONS. The statos had better data and they now knew that exports of services first recorded as being destined for Jersey and Guernsey were actually going elsewhere.
The ONS won’t say where. But there is an equally dramatic upward revision to exports to Saudi Arabia. An extra £24 billion, as it happens — boosting UK exports to Saudi Arabia by 50 per cent between 2009 and 2017. Put differently, a third of UK exports to Saudi Arabia were previously being recorded as going to customers elsewhere.
This may be an innocent statistical coincidence. But it’s hard to see where else those newly-materialised exports to Saudi Arabia could have been hiding if not the Channel Islands.
Arms and aeroplanes are among Britain’s biggest exports to Saudi Arabia and the after-sales services contracts in those industries are often of greater value than the physical kit. Separate services data suggests that the main sources of the changes to the statistics were “technical and trade-related services” — a maintenance contract on a fighter jet, perhaps — as well as the unhelpfully vague “other business services” sub-category.
In July the government greenlighted the sale of arms to Saudi Arabia, which were halted last year after a court victory for campaigners who drew attention to the kingdom’s war in Yemen. The revised figures show that Saudi Arabia is an even more lucrative customer than previously thought.
It is hardly news that Saudi Arabia is a key market for the likes of BAE Systems, for whom it is the largest overseas customer outside the US.
But this unannounced revision to a spreadsheet raises a £24 billion question: why do so many UK exports to Saudi Arabia appear to be going through secrecy jurisdictions on their way to the Middle East?
If you have an answer, my DMs are open.
