Tourism and the UK Economy: A Comprehensive Analysis

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Essay
How tourism contributes towards the UK Economy
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Table of Contents
LIST OF FIGURES.........................................................................................................................3
INTRODUCTION...........................................................................................................................4
BODY..............................................................................................................................................5
The economic contribution of Travel and Tourism in 2017........................................................5
The economic contribution of tourism in the UK in 2018...........................................................6
The contribution of Inbound tourism to the UK..........................................................................6
Economic impacts of Tourism on the UK..................................................................................7
The contribution of heritage tourism towards the economy of the UK.......................................8
Other contributions to the UK economy......................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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LIST OF FIGURES
Figure 1: Economic contribution of tourism in the economy of the UK by sectors........................5
Figure 2: United Kingdom: Total Contribution of travel and tourism to GDP...............................6
Figure 3: Overseas visits to the UK forecasts..................................................................................7
Figure 4: Components of Direct, Indirect and Induced tourism contribution to GDP....................8
Figure 5: The Channels of Economic impact..................................................................................9
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INTRODUCTION
Tourism in the UK’s economy is considered to be one of the most valuable export industries that
are facing fierce competition. Visit Britain helps in promoting the UK at international level as a
visitor destination and as a result in 2017 UK was ranked at third place for tourism at a global
level. Travel and tourism are considered to be one of the largest economic sectors that drive
exports, creates jobs and generates prosperity all around the world (Visit Britain, 2018). Through
the global economic impact of Travel and Tourism, there has been witnessed a 10.4% growth of
the global GDP and a creation of 313 million job opportunities by travel and tourism sector in
the year 2017. According to the studies, tourism in the UK is worth £127 billion in economic
terms by creating jobs and hiking the economic growth of the country across its nations and
regions.
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BODY
The UK can be successful in attracting tourists from European countries effectively and from
emerging economies leading to a boost of the economy by £12 billion in a year by 2025. The
growth and value of the tourism industry in the UK is much faster than the manufacturing, retail
and construction industries which thus end up contributing lot for the economy of the UK. In
comparison to the struggling manufacturing industries in the UK, the tourism industry has
achieved a one-third net increase in the jobs of the UK which has led to the increment in the
employment opportunities (Vanhove, 2017).
The economic contribution of Travel and Tourism in 2017
There has been a significant impact and contribution of the travel and tourism industry in the UK
which depicts across various areas in 2017. There has been an economic contribution in different
sectors of the UK amongst which as a direct contribution to GDP amounts to 93.5 billion of US
Dollars (Visit Britain, 2018).
Figure 1: Economic contribution of tourism in the economy of the UK by sectors
(Source: Statista, 2019)
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The economic contribution of tourism in the UK in 2018
According to the report by World Travel and Tourism Council, there is a direct contribution of
tourism towards the GDP of the UK which is 2018 rose by 2.1% (WTTC, 2018). There is a
direct contribution of employment as well which is supported by 1,716,500 jobs which in 2028 is
expected to rise to 1,901,000 jobs hiking the economic conditions of the society (Gordon, 2013).
Figure 2: United Kingdom: Total Contribution of travel and tourism to GDP
(Source: WTTC, 2018)
The contribution of Inbound tourism to the UK
It is reported that inbound tourism is considered to be one of Britain’s top export industries that
have the highest international visitors forecasted (Gordon, 2013). It has been recorded for
inbound tourism in the UK that the forecast will break through the mark of 40 million for the
first time in the year 2018 which will be up by 4.4% as compared to 2017 and will attract nearly
39.9 million visits in the UK. The spending by overseas visitors in the UK’s economy was
forecasted to reach in 2018 by £26.9 billion in 2018 (Brignall, 2017).
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Figure 3: Overseas visits to the UK forecasts
(Source: Visit Britain, 2018)
Economic impacts of Tourism on the UK
Tourism of the UK has a direct as well as indirect impact on the local economy which is based
on the structure of the sector and is linked widely with the tourism activities of the UK (WTTC,
2018). This linkage in the activities translates into higher economic activities levels that are
dependent on the imports to meet their demands and thus the overall contribution and impact of
the tourism sector is depicted as the sum of the indirect, direct and induced effects (Brignall,
2017).
Direct impacts of the tourism on the economy of the UK is in the terms of the GDP generated
by tourism activities such as the travel agents, airlines, tour operators, hotels and so on that meet
effectively the needs of the tourists and lead to tourist satisfaction which ultimately hikes GDP
by repeated visits of the tourists (Bronte, 2017).
Indirect impacts of tourism on the economy of the UK can be in terms of the activities that are
undertaken by tourism sector and include the capital investment within all sectors that are
involved with the tourism sector and the spending that includes the assets of tourism such as
accommodation and transport (Bronte, 2017). The indirect impacts also include the government
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spending on tourism that includes the spending on the visitor services and administration
(WTTC, 2018).
Induced impacts cover the contribution of tourism through the expenditures of the direct and
indirect employed persons by the tourism sector (Brignall, 2017).
Figure 4: Components of Direct, Indirect and Induced tourism contribution to GDP
(Source: WTTC, 2018)
The contribution of heritage tourism towards the economy of the UK
Apart from this heritage tourism also contributes a lot the economy of the UK as it counts
amongst the largest economic contributions in London that are estimated to support £5.7 billion
of gross value added. Heritage tourism also contributes including the indirect, direct and induced
impacts of the sector and contributing to 2% of the total economic output (Oxford Economics,
2016). Thus heritage tourism forms a major part of the tourism sector which indirectly
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contributes to the economy of the UK as there are millions of heritage motivated trips by the
visitors who spend billions in the economy of the UK contributing a lot to its development
(Oxford Economics, 2016).
The economic contribution and impact can be assessed looking at the following three channels of
expenditure by heritage tourism activities in the UK:
Figure 5: The Channels of Economic impact
(Source: Oxford Economics, 2016)
Other contributions to the UK economy
Due to the overseas visits to the UK in 2018 for the first time, the number of overseas visits
passed 40m and is predicted to spend a record of £27bn in next coming 12 months. Due to the
double-digit fall in the pound value against the dollar and the euro the tourists and the number of
the visitors are driving in the UK and is jumping the predictions of the post-vote slowdown of
the economy of the UK (Brignall, 2017). According to the report of The National tourism
agency, there is a rise predicted in the hotels and restaurants of the popular destinations of the
UK such as Bath, Edinburgh and London due to the inbound tourism rise in the UK (Bronte,
2017). There has been also an increase in the buying of the luxury designer brands by the
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travellers from the US, Europe and China that they get at the UK at prices lower than their home
country. The popularity of the other destinations which are linked to the films, TV programmes
and the popular books also attracts tourism-boosting the economy of the UK. One such example
was the event in 2017 linked to the 20th anniversary of the first Harry Potter book (Brignall,
2017).
As a major economic contribution, it emerged that the small and medium-sized businesses in the
hospitality sector also rose by 8.3% in the first half of the year 2017 (Bronte, 2017). And the
weak pound has been an attractive feature for the overseas tourists in this year which has drawn
many international visitors in the UK. Due to the Brexit, more Brits are opting to spend the
holidays in the UK which is attracting growing numbers of the inbound tourists as well leading
to a healthy impact on the SME businesses in the food sector and the accommodation service
sectors (Bronte, 2017).
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CONCLUSION
In a nutshell, it can be connoted that tourism to a great extent solves the concern of the
government related to the futuristic growth and the quality jobs. Travel and tourism contribute a
lot to the economy of the UK by supporting one in every ten jobs on the planet and serving as a
dynamic engine of the employment opportunity. Tourism is impacted by the three interrelated
routes of the direct, indirect and induced effects of tourism activities. There is the positive
contribution of tourism on the growth of the economy of the UK and the impact on employment
is also positive as compared to other sectors. Also, tourism is predicted to grow at a rate of 3.8%
till 2025 which is significantly faster as compared to the overall UK economy and other sectors
such as retail, construction and manufacturing.
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REFERENCES
Brignall, M., 2017. The UK braced for a record number of tourists in 2018. Online available at
(https://www.theguardian.com/travel/2017/dec/26/uk-braced-for-record-number-of-tourists-in-
2018) last accessed January 2019.
Bronte, G., 2017. Britain's "thriving" tourism economy gives the sector a boost. Online available
at (https://www.bighospitality.co.uk/Article/2017/08/25/Britain-s-thriving-tourism-economy-
gives-sector-a-boost) last accessed January 2019.
Gordon, S., 2013. Tourism to bring £257bn to UK economy by 2025 - plus another £12bn each
year if we attract more Chinese visitors. Online available at
(https://www.dailymail.co.uk/travel/article-2511801/British-tourism-contribute-257bn-UK-
economy-2025.html) last accessed January 2019.
Oxford Economics, 2016. THE IMPACT OF HERITAGE TOURISM FOR THE UK
ECONOMY. Online available at
(https://d2rpq8wtqka5kg.cloudfront.net/347523/open20161101085400.pdf?
Expires=1547192281&Signature=WkVUmJw-voAfb0nJ4NExgNYFDzZseFN-
BZwS2~wJBBT2TFYvu~tQJpQZFWnHunNBQWzznTHo81ReX6vD4yafOlgpwA9LTRy~vStJ
67DNKTAR6TIKNU8SNZnNuI5NtX57-r21wZ0KUbOk6LFZgA2kGoSBsNmepOa-
tkipl11WSnGFJDPKwfhs1GYHAwZku6EMju3u2kCMSqvvPAR3MwaqZMg-
kPfywNaSKFSvijaf7~xJUm4ts~G-WRVNYJs4HD67EOsaBQ5IzOLUtF1-
1OkeCufnlavYgcfugjPq-2i0Lt8v8eSrkpPIkzSgt35fv5fqJdonjZrbnKnbsMLgD4nZnA__&Key-
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Statista, 2019. Economic contribution of the travel and tourism industry in the United Kingdom
(UK) in 2017, by sector (in billion U.S. dollars). Online available at
(https://www.statista.com/statistics/298260/economic-impact-of-the-travel-and-tourism-industry-
in-the-united-kingdom/) last accessed January 2019.
Vanhove, N., 2017. The Economics of Tourism Destinations: Theory and Practice. Routledge.
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