The UK is planning to redesign its trade relationship after 44 years of being part of the EU. It is not going to be easy.

Not only is the UK breaking up from its biggest trading partner, but it is doing so when its next largest, the US, is moving towards protectionism. The UK is part of a global — but most of all European — value chain and has a relatively weak trade position in other markets, including the Commonwealth countries and the US.

The EU is by far the UK’s largest market

The value of UK goods exported to the EU is about the same as its exports to the rest of the world. Imports from the EU total more than that from all other countries combined.

The EU is the biggest market for nearly every product group exported by the UK, including cars and the UK government has tried hard to persuade carmaker Nissan to maintain its presence in the country. The value of car exports to the EU are almost three times that of cars exported to the US.

A similar pattern can be seen in the aerospace industry and in electrical machinery. In fact the UK exports a larger value of goods to the US than the EU only in the case of organic chemicals.

The UK is part of a global — but mostly European — supply chain

About 60 per cent of UK exports are intermediate and capital goods, or raw materials, not final consumer goods. As a study on the aerospace industry by the CBI, the employers’ organisation, puts it: “The UK’s focus on the supply of parts, systems and services — rather than assembly — means that demand for products is focused around the major manufacturers.”

This is reflected in the fact that the UK’s imports are predominantly the same products that it exports, as parts of the same product cross borders several times before being finally assembled.

The US is an unlikely trading partner for the UK

The UK government sets great store on a trade deal with the US, but is not in a good position to forge stronger trade ties with the country. The UK runs an overall trade surplus with the US of about £14bn annually, with the main goods exported being pharmaceuticals and cars. President Donald Trump has promised to shrink the US trade deficit, talked about challenging the high price of pharmaceutical products and is taking measures to repatriate manufacturing production — particularly of cars.

The UK is weak in other markets and not because of the EU

UK Prime Minister Theresa May’s optimistic view of new trade deals and booming export markets once the UK is out of the EU is at odds with its weak trade position. Being an EU member has not stopped Germany having a market penetration about double that of the UK in the US, and a stronger presence in all other target markets including India, China and Australia.

The UK’s healthy services exports need the EU

Goods exports are only one part of the UK trade story, and not the most profitable.

The UK exports almost as much in services as in goods. In 2015 they amounted to £230bn and £266bn respectively, but it imports nearly three times the value of goods than that of services. This leaves the country with a large and widening goods trade deficit and a similarly large and widening surplus in services trade.

As with goods, the EU is the UK’s largest destination for services exports and its main source of services imports. Services and goods should not be considered separate categories, but as interconnecting parts of the same supply chain.

As an academic paper puts it, “services trade, including investment and the temporary movement of persons as service suppliers, is salient for the performance of the UK’s manufacturing base and its trade competitiveness”.

The financial sector is arguably an area of specialisation in the UK, but there is a host of business services such as legal advice, engineering, marketing or consulting, for which the total value of cross-border trade exceeds that of financial services.

The UK's trade ties with the EU are substantial. The restructuring post-Brexit will be a difficult task.