Regional economic performance and the devolution of powers in the UK are the subject of increasing interest and attention. Shifts to more localised policy making and Britain’s exit from the EU demand better understanding of the operation of the UK’s internal market, as well as the linkages between different parts of the UK. However, an absence of interregional trade data has proved a significant barrier to detailed analysis. This project addresses this problem by developing frameworks for constructing interregional trade data on a consistent basis for the UK.
Improved interregional trade flow data is vital to understanding regional economic policy and regional fiscal policy, and to monitoring the principle of ‘no- detriment’ which is central to UK devolution settlements. Accurately measuring and understanding interregional trade is not though a challenge unique to the UK. Research has been undertaken in many countries for the same purpose. Much of this work has focused on ‘top down’ disaggregations of national level data combined with estimation or attribution of interregional trade flows based on survey data. However, this raises a number of issues, particularly around the coverage of surveys and the consistency with which data are collected and reported.
We have examined the range of existing approaches, alongside the particular data landscape of the UK, to better understand how a consistent set of interregional trade estimates covering the whole economy can be produced for the UK. We have produced initial estimates of trade between Scotland, England, Northern Ireland and Wales, using some of the existing approaches and data sources, including freight data, UK Tourism Surveys and interconnector data. These estimates suggest a high degree of trade linkage between the countries of the UK. In the next stage of our work we are developing a strategic approach to the collection of trade information and estimation of trade within the UK, with different approaches for goods and services, and supporting the development of a consistent ‘supply and use’ framework for Scotland, England, Northern Ireland & Wales.
In this project we are also developing regional consumer price indices, building on significant research undertaken by the University of Southampton.
Our work in this project supports better regional policymaking in the context of ever-increasing interest in regional consumption, activity and trade. The process of producing the estimates and our work with the devolved administrations and Whitehall departments highlight the need for a coordinated effort to improve the coverage and coherence of interregional trade information within the UK. This is leading to new proposals, which have the support of all these organisations, and which have the potential to lead to a transformation in the collection and estimation of inter-regional trade within the UK.