EU Exit - Trade Analysis

DfE commissioned NISRA to undertake a survey of Northern Ireland (NI) businesses who trade with Ireland (IE) and undertake an analysis of HMRC trade micro data. The objective was to provide more detailed information on the frequency and value of cross border movements of goods and the extent of cross border supply chain linkages to inform EU Exit discussions.

 

Cross-Border Supply Chain Report

The main findings from the Cross-Border Supply Chain Report are:

Headline Results - Cross-Border Supply Chain Report

  • Provisional estimates indicate that NI VAT and PAYE registered businesses (in the non-financial and non-farm sectors) made some 758,000 cross border export deliveries to IE, estimated to be worth some £3.4bn to the local economy in 2016. In addition there were approximately 410,000 import deliveries in 2015 from IE to NI businesses worth nearly £2.0bn in the sectors covered by the survey.
  • The majority of those cross-border transactions were made by micro and small businesses, which dominate the NI economy, with approximately 74% of export deliveries involving NI businesses with fewer than 50 employees and 33% carried out by businesses with fewer than 10 employees.
  • Northern Ireland businesses exporting to IE made on average nearly 100 deliveries valued at approximately £4,500 per trip in 2016. Most businesses tended to make low value deliveries but these accounted for just less than one fifth of the total value of exports. Conversely, just over twenty percent of businesses made deliveries worth more than £4,500 per trip and these accounted for most (82%) of the total value of NI exports to IE.    
  • Exports to IE accounted for more than 15% of businesses (NI + IE) sales for five of NI’s District Council Areas (DCAs) with most border DCAs showing a greater propensity for trade with IE, than DCA’s not adjoining the border.
  • Analysis of HMRC trade data indicated that 39% of NI trade (total exports and imports above the respective Intrastat reporting thresholds) with IE was comprised of trade in “intermediate” goods i.e. goods that are used to produce other goods, which may be considered as evidence of supply chain activity.
  • When NI businesses who are both exporting and importing agri-food products that are ready for the market (Meat & Fish Products, Foodstuffs, Dairy Products and Beverages) are also included, two-thirds of goods traded with IE can be considered to be part of such supply chain activity. This wider definition of supply chain activity reflects agri-food products that were intensively traded across the border and were frequently time sensitive.
  • While trade in intermediate goods or bilateral trade within the same sector are not unequivocal indicators of supply chain activity they nevertheless highlight the critical importance of North-South business to business inputs for traders above the reporting thresholds.
  • As a small open economy NI trade is also integrated into trade with the Rest of the European Union (REU) and the Rest of the World (RoW). Sixty two per cent of trade with the REU met this wider definition of Supply Chain activity as did 53% of NI’s trade with the RoW.
  • Trade in capital goods can also be considered as a further type of input to the production process. Northern Ireland was much more likely to trade in capital goods with the REU (21% of above threshold trade) and the RoW (23%) than with IE (7%). This is in addition to the wider definition of Supply Chain activity described above and provides further evidence of NI’s integration into markets beyond these islands.
  • The current research paints a rich picture of the web of cross-border connections and trade between NI businesses and businesses and consumers in IE.  This is, however, only a partial picture of the movement of goods across the border, as NI relies heavily on moving and receiving goods through IE ports for its trade with GB. Previous estimates have indicated that NI sales of goods to GB are worth nearly 4 times that of sales of goods to IE of which the current exercise does not take account. North-South supply chains cannot be considered in isolation from trade with GB and this remains an area for further research.

What counted as a cross-border delivery in the research?

Trade in goods and associated services by NI businesses registered for VAT or PAYE

  • A NI export to IE - from a NI business to a business or household (758,000) in IE
  • A NI import from IE - from an IE business to a NI business (410,000)

What’s not counted as a cross border delivery?

  • Cross-border movement of goods within NI (e.g. Fermanagh to Newry via Monaghan)
  • Cross-border movement of goods within IE (e.g. Donegal to Dublin via NI)
  • IE movement of goods to Great Britain (GB) through NI ports and vice-versa (e.g. through Belfast, Larne or Warrenpoint ports)
  • NI movement of goods to GB through IE ports and vice-versa (e.g. Dublin port)
  • Hauliers’ journeys only indirectly related to cross-border exports and imports
  • Deliveries by IE businesses direct to NI consumers (e.g. by post or home delivery)
  • Deliveries by businesses with turnover below the VAT threshold.

Intrastat Thresholds

A UK business is only required to submit detailed “Intrastat” product information to HMRC if the total value of exports to the EU is worth more than £250k per year.  Similarly, businesses only provide detailed “Intrastat” product information to HMRC if the total value of their imports from the EU as a whole is worth more than £1.5m per year. These are known as “Intrastat reporting thresholds”. Otherwise businesses report the total value of exports and imports by destination and origin to HMRC (but without detailed product information).

The detailed product analysis referred to throughout the report is therefore only possible for those NI businesses whose exports and imports are above the respective Intrastat reporting thresholds. However, the detailed “Intrastat” product information analysed in the report accounted for nearly 90% of the value NI’s exports to IE and 42% of the value of NI’s imports in 2015.

Other analyses of HMRC data referred to in the report include the total value of NI exports and imports to/from IE and other markets (i.e. taking account of the value of trade both above and below Intrastat reporting thresholds).

Provisional Results

The results in the publication are considered provisional because the report involves a new survey of businesses and novel analysis involving HMRC trade microdata. The report may be updated on receipt of views from users. If the report is amended, NISRA will ensure this is suitably noted in any future publications.    

Other Current Publications

    Data sources

    There are two main sources of data on trade for NI:

    • HM Revenue & Customs (HMRC) – HMRC is responsible for collecting the UK’s international trade in goods data. Their ‘UK Regional Trade Statistics (RTS)’ combine UK-wide Intrastat returns and customs declarations with data from Office for National Statistics’ (ONS) Inter-Departmental Business Register to apportion trade to each of the constituent parts of the UK, including NI.
    • NISRA – NISRA is responsible for collecting the ‘Broad Economy Sales and Exports Statistics (BESES)’. BESES provides an experimental measure of local businesses’ domestic, regional and export sales to markets outside NI and has been gathered through the NI Annual Business Inquiry since 2011.

    In addition, the Department of Agriculture, Environment and Rural Affairs in Northern Ireland (DAERA) collects and publishes detailed administrative data on the movement of animals, and the Central Statistics Office (CSO) in Ireland also produces its own estimates of trade between Ireland, Northern Ireland and Great Britain.

    Where data is available from multiple sources, NISRA and DAERA sources are used to provide consistent estimates of trade in both goods and services between NI and IE, and between NI and GB for local businesses. HMRC sources are used where equivalence is required between UK national trade or for trade at the individual product level.