UK-US trading and investment: a special relationship

“Our trading relationship is worth over £190 billion a year, and we are the largest investors in each other’s economies, with mutual investments valued at as much as $1 trillion.”

Theresa May, 4 June 2019

“Our nations have more than $1 trillion invested in each other’s economics. The United Kingdom is America’s largest foreign investor and our largest European export market.”

Donald Trump, 4 June 2019

During their joint press conference during President Trump’s state visit to the UK, the President and the Prime Minister both spoke about foreign investment and trade between the United States and the UK. Both leaders’ claims were correct.

A trading relationship

Mrs May said the UK-US trading relationship was worth over £190 billion per year. That’s correct if you look at the value of what each country exports to the other.

UK exports in goods and services to the US were worth around £118 billion in 2018 with US exports to the UK (or what we import) worth just over £72 billion. In total that’s trade worth around £191 billion to both the UK and the United States.

You could also express that in terms of the UK’s balance of trade (exports minus imports) which was worth just under £46 billion.

Mr Trump also said that the UK was the USA’s largest European export market. That’s correct. In 2018 exports to the UK made up almost 6% of all US exports, putting it behind Canada, Mexico and China, but ahead of all other countries the US exports to (including those in Europe).

Investing in the relationship

Both Mrs May and Mr Trump claimed that over $1 trillion was mutually invested in the two countries. The Prime Minister’s office told us this was based on US figures from the Bureau for Economic Affairs (BEA).

These show that the UK-based companies invested around $541 billion in the USA in 2017 while US-based companies invested around $748 billion in the UK. That totals around $1.3 trillion (which is slightly over £1 trillion).

Mr Trump also claimed that the UK is America’s largest foreign investor. That’s correct, according to the BEA figures. The $541 billion the UK invested in 2017 put it top for investment in the US ahead of Japan, Canada, Luxembourg and the Netherlands that year.

Figures from the Office for National Statistics (ONS) in the UK are slightly different and put UK-based companies’ investment at around £258 billion in 2017 (or $330 billion based on that year’s exchange rate).

Mrs May expanded on this by claiming that the US was also the largest investor in the UK. That’s also correct, US-based companies invested around £351 billion in the UK ($450 billion). That makes it the top investor ahead of the Netherlands, Luxembourg, Japan and Germany.

The ONS told us that it’s unclear exactly why their figures and those from the US differ so much, and say they’re undertaking work to find out more about this. We’ve run into this issue with trade figures before and written more about it here.