Global Britain Briefing Note
No 13 2nd March 2001

Currency of Invoicing for UK Exports:
Dollar Usage More than Double that of Euro

New official data shows that the US Dollar is more than twice as important to British exporters of goods as a currency of invoicing than the Euro.

In May 2000 Global Britain published research demonstrating that at least 60% of British exports world-wide (including not just goods but services and investment income receipts as well) are Dollar-linked, the linkage arising because those exports go to Dollar-linked countries or Dollar-linked industries or both.1 A new survey by HM Customs & Excise (summarised in Table 1 below) on British exporters’ currency of invoicing2 confirms the importance of the role of the US Dollar in British overseas trade of goods, which account for less than half of total British exports. (Table 2 below).

The survey shows the following:-

British Exports

  • The US Dollar is second only to Sterling as the currency in which British exporters of goods invoice their shipments world-wide. (Table 1).

  • For those shipments worldwide, US Dollar usage as a currency of invoicing is more than double that of the Euro. (Table 1).

  • Even for shipments to Britain’s 14 EU partners, the US Dollar is the currency of invoicing for 25% of exports of goods. (Table 1).

  • For shipments to the EU Euro-zone the position is very similar. (Table 1).

  • For shipments outside EU ‘14’ to the rest of the world, the Euro is hardly used at all: Sterling and the US Dollar between them account for 94% of British goods exports. (Table 1).

  • For shipments to Britain’s biggest single EU market (and second biggest market world-wide), Germany, the US Dollar ranks ahead of the Euro as a currency of invoicing. (Table 1).

 

British Imports

  • The US Dollar is second only to Sterling as the currency in which British imports of goods from the whole world are invoiced. (Table 1).

  • US Dollar usage is more than double that of the Euro for British imports of goods from the whole world. (Table 1).

  • For goods imports into Britain from her EU ‘14’ partners, the Euro is less important as a currency of invoicing than Sterling, but more important than the US Dollar. (Table 1).

  • For goods imports into Britain from the EU Euro-zone, the Euro is more important than the Dollar, but less important than Sterling, as a currency of invoicing. (Table 1).

  • For imports of goods into Britain from outside EU ‘14’, Euro usage as a currency of invoicing is very small. (Table 1).

  • For imports of goods into Britain from Germany, Euro usage as a currency of invoicing is high; ahead of Sterling and the US Dollar. (Table 1).

Conclusion

Historically, Dollar/Euro (and before that Dollar/DM) exchange rate volatility has been substantially greater than that of Dollar/Sterling. If the Euro were ever to replace Sterling, and if the high volatility of the Dollar/Euro exchange rate were to persist, the consequence would be:-

  • More rather than less exchange rate volatility for British trade worldwide, in services and investment income as well as in goods.

  • Even for British trade in goods with EU ‘14’, the Dollar-denominated component of that trade would suffer higher exchange rate volatility than hitherto.

 

Table 1

Currency of invoicing by area: British overseas trade in goods in 1999:
Percentages by volume

A: To/from whole world Exports Imports
  Sterling 52 40
  US Dollar 27 30
  Euro † 12 14
  Others 9 16
    100 100
B: To/from EU '14'
  Sterling 43 47
  Euro † 31 42
  US Dollar 25 9
  Others 1 2
    100 100
C: To/from Euro-zone *
  Sterling 41 47
  Euro † 32 42
  US Dollar 26 9
  Others 1 2
    100 100
D: To/from world excl. EU '14'
  Sterling 64 32
  US Dollar 30 54
  Euro † 2 4
  Others 4 10
    100 100
D: To/from Germany
  US Dollar 37 11
  Euro † 32 61
  Sterling 29 26
  Others 2 2
    100 100

†  "Euro" includes Euros and "legacy currencies": DM, Francs, etc

*  The 12 EU countries, including Greece, which have adopted the Euro.

 

 

Table 2

British overseas trade in goods as
a proportion of total British overseas trade
(goods, services, receipts of income, transfers): 1999

  Exports Imports
To/from whole world: Total £357 bn £368 bn
To/from whole world: Goods £166 bn £192 bn
Goods as proportion of Total 46% 52%

Table 3

British overseas trade in goods in 1999

  Exports
£bn
Imports
£bn
To/from whole world £166 bn £192 bn
To/from EU '14' £97 bn £104 bn
To/from excl. EU '14' £68 bn £89 bn
To/from Euro-zone £91 bn £97 bn

NOTES:

  1. eurofacts 5th May 2000 page 1 "UK Exports: 60 per cent are Dollar-linked"

  2. Released on 23rd February 2001. Published jointly by HM Customs & Excise (which collects the data) and the Office for National Statistics. Analyses will be published annually; data for 2000 will be available in autumn 2001.

Websites:

HM Customs & Excise: www.hmce.gov.uk
Office for National Statistics: www.statistics.gov.uk

 

Enquiries: Ian Milne (Director)
Global Britain, PO Box 38520, london, SW1E 5YT
Email:
Tel: 020 7630 0126 Web:
globalbritain.org

Lord Stoddart of Swindon - Lord Harris of High Cross - Lord Pearson of Rannoch
(Labour) (Independent) (Conservative)