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Government’s analysis, assessment and research activities
Report: Trade in services as well as value added tax-based trade has still greater significance in economic relations between Finland and Great Britain

Government Communications Department
Publication date 14.2.2017 14.06 | Published in English on 14.2.2017 at 14.30
Press release 69/2017

Great Britain is still an important trade partner for Finland in certain sectors, even if the overall significance of commerce between the two nations has declined over the years for Finland, remaining slightly below the average level for EU and EFTA countries. This emerges from the report dealing with economic relations between Finland and Great Britain published today.

Great Britain’s share is greater these days in Finland’s service export and import than in the export and production of goods. The significance of the services sector is, however, also largely dependent on the development of export in goods. In addition to the trade between Finland and Great Britain, the review also covers information on the commerce other countries engage in with Britain. The review is based on available statistical data.

Finland exports more goods to Great Britain than what it imports from there – in services, the situation is vice-versa

According to the report, Great Britain's important for foreign trade is slightly better than to the EU and EFTA countries on average. The significance of trade in services is, according to the report, greater for Finland than trade in goods.

Export and import of goods from Britain have nearly halved in ten years, resulting in a surplus for Finland. Paper and cardboard represent the most important commodity group in export to Great Britain. Also when seen from the international perspective, Finland’s paper industry export to Britain is significant. Other important export groups are other forest industry products, oil products and machinery and equipment, metals and metal products, and chemical agents and products. With respect to import, important sectors include machinery and equipment and transport devices as well as chemical agents and products.

With regard to trade in services, the balance of trade shows a deficit for Finland. Subsequently, Finland imports more services than what it exports there. Due to these statistical changes, information on various service batches cannot be acquired in this connection, but indications of the pivotal significance of various business services in the commerce between the two countries can nevertheless be obtained.

Finland’s import from Great Britain has specialised in end products – export on its part in intermediate products

Finland’s export to Great Britain has become specialised to some extent more in intermediate products than Finland’s overall export. Finland’s import from Britain has, on the other hand, specialised more to some extent in end products than Finland’s overall import.

In the export of intermediate products, the most important Finnish sectors are the chemical, forest and technology industries. In the service sectors, the most important export line is management functions and support services.

With respect to import, the most crucial sectors are wholesale trade, the manufacture of motor vehicles and machinery, production of chemicals and chemical products, and management functions and service services.

The service sectors are emphasised in value added tax trade

Of Finland’s value added tax export, almost 5 per cent went to Great Britain in 2011. This is 1.1 per cent of Finland’s gross national product. The most important field was research and development as well as other operations serving business life, wholesale and retail trade, repair of motor vehicles and the forest industry.

Great Britain’s share of foreign value added tax import to Finland is slightly over 5 per cent. The most important sectors are services in real estate, rental and research together with other business services. Almost 12 per cent of the entire import in these fields to Finland came from Britain in 2011.

Manufacturing industry products are also significantly committed with regard to service sectors-based revenue. Although the importance of the service sectors in export value added production is great, it is largely dependent on the development of export in goods. This emphasises that the competitiveness of the service sectors is important from the perspective of Finland's export in goods.

Great Britain is invested in Finland more than Finland in Britain

The comprehensive investment portfolio from Finland to Britain was in excess of 2 billion euros in 2015, totalling 2 per cent of all direct investments made abroad. The comprehensive investment portfolio from Great Britain to Finland was in excess of 3 billion euros, which was 4 per cent of all direct investments made to Finland.

Also, more British subsidiaries function in Finland than Finnish subsidiaries in Britain. The majority of British subsidiaries operate in the service sectors. About half of the Finnish companies operating in Britain are industrial enterprises.

The Research Institute of the Finnish Economy (Etla) carried out this report concerning economic relations between Finland and Great Britain. The report has been realised as part of the 2016 report and research plan implementation by the Government of Finland, and it functions as background material in the preparations for the negotiations related to Great Britain’s separation from the European Union.

Final report (in Finnish)

More information on Government’s analysis, assessment and research activities is available at tietokayttoon.fi

For more information, please contact:

Markku Kotilainen, Research Director, Research Institute of the Finnish Economy (Etla), tel. +358 (0)9 60990206

Leila Vilhunen, Specialist in EU Affairs, Prime Minister’s Office, tel. +358 (0)295 160276