Figures published by the Office for National Statistics show that UK services export volumes have risen nine times faster than goods since 2010.
The UK is already the second largest exporter of services in the world, after the USA, and has world class capabilities in sectors such as financial and professional services; as well as growth industries like tech and life sciences.
In short, as the debate around how to transform the growth rate of the UK economy intensifies, there’s a growing view that we should double down on our existing strengths as a country, become a services sector superpower, and seek out services trade agreements with countries from Singapore to Japan.
As a long-term champion of UK aviation and someone who has always recognised its importance as an engine of growth, it’s clear to me that the sector plays a critical role in securing this vision.
Businesses operating in these high-value and highly-skilled industries are always going to require air travel and face to face interaction to clinch new deals, secure seed capital from international investors or to inspect their global supply chains.
It’s against this backdrop that WPI Economics and Manchester Airports Group (MAG) are today (21st May) publishing some new research, Services Superpower, which looks at the UK’s role as an island trading nation.
Not only do they calculate the current economic contribution of ten services sectors particularly reliant on international connectivity at a whopping £643 billion, they also show how those sectors are projected to grow quicker than the rest of the economy; and finally, by comparing the UK with a set of peer countries, the research demonstrates the extent to which, as an island trading nation and services-oriented economy, we are disproportionately reliant on aviation for growth.
For me, one figure in the report stands out among all the others: the world economy would lose almost 1 per cent of GDP if the UK didn’t send any business travellers abroad. Because innovation and international connectivity are closely linked, and the UK needs to spur innovation in knowledge-intensive industries to raise its productivity levels, it’s increasingly clear how important our global connections are to the economic future we need to build.
The UK already has the third largest aviation market in the world; so, one might reasonably ask: what’s the problem?
For me, the point is that because we’re disproportionately reliant on aviation versus other countries and it is such a key enabler of the economy, there is an argument that we should be going further and faster than others to decarbonise it.
The stakes are high to ensure that our connectivity with the outside world is sustainable.
The economic fruits on offer from creating new green industries such as sustainable aviation fuels (SAF), which can significantly reduce emissions, are huge. We could create thousands of jobs at SAF plants around the country. Why not put the UK in pole position in the global race for SAF?
There’s also the dynamic around business resilience. If we end up being a net importer of SAF rather than developing our own homegrown supply, we’ll be at the mercy of volatile energy markets and it could very well push up the cost of air fares for precisely those businesses our country will rely on to export more.
We’re an island trading nation that relies on its aviation sector. As the sector undergoes its transformation to become net zero, let’s be in the vanguard of seizing all the opportunities that brings with it.
Finally, it’s important to set out how new, more direct and better connections between our regional economies and the outside world can drive growth – because businesses in those economies will benefit from closer proximity to export markets and the pool of international investors.
We need an aviation sector that is simultaneously growing and reducing its carbon emissions down to net zero. Its importance to our future as a services superpower cannot be overstated.
The technology exists to do it. Now we need to seize the opportunity in a partnership approach between industry and the government.
The importance of aviation to our future as an island trading nation
