Global connectivity key to UK becoming “services superpower'

• Study from WPI Economics reveals sectors most reliant on international access will grow faster than rest of UK economy in next 10 years, which is worth an extra £10.6bn.
• Growth could be turbo-charged if policy-makers support sustainable plan for aviation, says boss of UK's largest group of airports.
• Leaders from high-value industries like life sciences, advanced manufacturing and financial services say strong air links are key to their future success.

Leading voices from the region's business community, including London Stansted owner MAG, say strengthening global connectivity is key to turbo-charging the growth of high-value industries.

Research released today states the UK is the world's second-largest exporter of services and has the opportunity to "double down" on that to drive economic growth over the next decade.

But - according to the WPI Economics study - businesses in these industries are more reliant on strong global links for success, especially due to the UK being an island nation.

The study looked at 10 traditional sectors - including financial services, the creative industries and real estate - all of which are particularly reliant on air travel for their success. They are projected to grow 2% faster than the national average over the next decade - equal to £10.6bn of extra economic value.

It also profiled four fast-growing sectors - advanced manufacturing, life sciences, fintech and advanced digital - which also depend on strong global connectivity and are tipped to grow rapidly in the coming years.

According to the report, the growth of all these industries could be undermined if the UK's international connectivity weakens in the years ahead - but could also be turbo-charged if the sustainable growth of aviation is supported by policy-makers.

It was launched at a special Parliamentary reception, where service sector leaders were joined by Shadow Business Secretary Jonathan Reynolds.

They heard from Ken O'Toole, CEO of MAG - which owns London Stansted, Manchester and East Midlands Airports. He said:

"The fact the UK has world-leading expertise in a number of high-value sectors should be a source of both pride and optimism, as focus intensifies on how to achieve transformative economic growth.

"But if we want to double down on the things we are already good at, then we need to understand what these industries need to fulfil their potential - and it is clear from this important research that strong international connectivity is of critical importance, especially as an island nation.

"That is why we need to accelerate the plan to grow aviation sustainably, so that businesses in these sectors can reap the benefits of having better access to the world through airports in all parts of the UK. Whoever forms the next UK Government must place that at the heart of their economic plan for the country."

The report said the UK is behind only the United States and ahead of the likes of Germany and China when it comes to services exports. It also ranks fourth in Harvard University's 'Global Outgoing Knowledge Index,' making a major contribution to the world economy through the value of the expertise it exports. It is estimated that if business travel from the UK were to stop, 1% of total global GDP would be lost.

At the same time, the UK was the most internationally connected country in Europe in 2019, while growth in global business travel outstripped that seen by countries including France, Australia, the US and Spain last year.

The 10 traditional sectors profiled by researchers - which also include electric power generation, insurance and hospitality - collectively contribute £643bn and 4.3m jobs to the UK economy each year.

Using proprietary machine-learning technology, they also looked at four emerging, high-growth sectors: advanced manufacturing, fintech, life sciences and advanced digital. Between them, they had combined turnovers of £110bn in 2023 and have five-year growth rates of 51%, indicating they are likely to grow even faster than the national average, with the right conditions in place.

The release of the report builds on findings from the Resolution Foundation'Ending Stagnation'study, which concluded that to turbo-charge UK productivity, it should focus on the things it is already good at and become a services sector superpower.

Researchers spoke to a series of entrepreneurs, business leaders and trade groups to inform the study, and they today called on policy-makers to support a strong aviation sector.

Harriet Fear, Special Adviser, Cambridge& and Chair, Cambridge Ahead, said:

"Cambridge& is the shop window for international organisations seekingto invest in Greater Cambridge- Europe's largest innovation ecosystem.

"So, I see firsthand how the companies scaling here, which offer so much promise for the UK economy and are so attractive to international investors, are dependent on air travel. Not leastto secure capital, access global talent for their long-term pipeline and support deal flow.

"Given my experience of working in the life sciences sector, it doesn't surprise me at all that, according to WPI's research, the sectors in the economy forecast to grow the quickest are those that are particularly dependent on international connectivity and access to global markets."

Simon Revell, Export Sales Manager at Suffolk-based Claydon Drills, said:

"As an SME it is crucial for the continued growth of our business to be able to hold face to face meetings with current and future distributors and in particular the end users of our Opti-Till® crop establishment system."

Ben Mekie, CEO of The Acuity Method - a London-based firm that has created a tool to assess and develop global finance professionals, said:

"As we look to solidify our presence in key global markets like India, as well as expanding into the US, in-person contact will be key, even if initial conversations have taken place virtually.

"That means that having the best possible connections to our priority markets - now and in the future - will be critical to our success, and that of other businesses in our sector. Maintaining a strong aviation industry will be so important if we want businesses like ours to continue to flourish here in the UK."

Mike McNicholas, Managing Director Infrastructure, UK & Ireland at global engineering specialist AtkinsRéalis, said:

"As a world-leading design, engineering and project management organisation, being able to connect people is critical for us, and that is why international connectivity, physical and digital, is absolutely vital to the future of our business, our growth plans and our ongoing success as a global operator.

"Overall, we know that people like people and in-person engagement is a crucial part of creating new relationships and getting things done - when we have the right people in the room together, relationships grow and ideas flow.

"As a business, sustainable aviation is so important to our future, and we believe it is crucial for policymakers to recognise the value of high-quality global trade links that air connectivity provides. As an exporting island-nation, it is so important to get this right."

Giulio Corte, Technical Director and Sustainability & Climate Change Aviation Lead for WSP, said:

"As a leading multi-disciplinary professional services consultancy, promoting sustainable growth is at the heart of WSP's vision.

"The aviation industry is vital to enhancing national and global connectivity and is an essential enabler to propel the UK's economic prosperity. Alongside MAG and other partners, we firmly champion the vital need for direct routes to key economic hubs, to catalyse economic growth and opportunity.

"In doing so we are wholly committed to contributing with our expertise to the decarbonisation and climate change emergency response of the sector, by pioneering innovative solutions that pave the way for a smarter, greener and resilient future."

John Fagan, UKIMEA Transport Leader, Arup, said:

"As a global engineering firm, Arup expertise has increased value and lowered carbon emissions for airport operators while enhancing passenger experience at many of the world's busiest aviation hubs. A sustainable growth plan for aviation will ensure the sector continues to contribute to the UK's economic growth and boost jobs while enabling Arup to work on projects that continue to deploy our expertise in sustainable development, design, and innovation.

"We have been involved in the aviation sector for more than 60 years, with experience through a wide range of assignments at more than 100 airports worldwide, including Manchester Airport. Advising most of the world's leading airports, we are globally recognised as a trusted aviation services partner. The aviation sector will continue to play an important role within our transport business."

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