Tourism's Contribution to the UK Economy: An Economic Impact Analysis

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Essay
How Tourism contributes to the UK
Economy
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Table of Contents
INTRODUCTION............................................................................................................................. 3
BODY.............................................................................................................................................. 4
Contribution to Employment and Creation of job by tourism in the UK....................................4
GDP growth in the UK by Travel and Tourism............................................................................4
Increase in visitors export and Investment by travel and tourism in the UK.............................4
The impact on the total economic contribution by Tourism......................................................5
Future impact on UK’s economy by Tourism.............................................................................5
Long-term growth of the economy by tourism..........................................................................5
Impact of heritage tourism on the UK’s economy.....................................................................5
The tourism industry can be utilised to its full potential for contributing to UK’s economy.....6
CONCLUSION................................................................................................................................. 7
REFERENCES...................................................................................................................................8
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INTRODUCTION
Tourism is known to be one of the best export services in the UK; it has been facing a large
competition in this sector. Tourism industry serves at their best to the UK’s economy as there is
a large number of visitors every year that contribute a lot; they not only help in a monetary way
but also help the economy to be famous worldwide. Tourism industry helps the UK to introduce
itself at the international level, it provides employment opportunities, helps in the growth of
GDP and also helps in the overall economic development. The UK got the third rank for Tourism
in the global level and this shows that tourism has a great impact on the economy. The various
reports also show that the contribution of tourism has increased to the economy of UK by
reaching to 40.3 billion visitors in 2017 (Council and Green, 2017). Tourism and travel attract
many other sources of income to the country and help the citizens of UK to get engage
themselves in various activities. Global data records also show that tourism contribution is likely
to increase at a higher level in 2019. There are three main areas where the contribution of the
tourism industry is more to the UK's economy and these are as follows, Employment,
Compensation of employees, Gross value added. A UK tourist spending contributes to the job
creation, gross value added and employee’s compensation directly or indirectly by various
forces or factors that help in economic growth.
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BODY
UK’s economy is highly influenced by tourism & travel and is successful in attracting many
visitors from the international market (Young et al., 2017). Tourism and travel have contributed
more than one-third of the overall economy which is more than other industries, the growth of
tourism is much faster than that of manufacturing, retail and many other sectors (Vanhove,
2017). The various reports of tourism industry report of UK say that there was the highest
record in the corresponding months in the year 2018 and it is likely to grow every year by some
percentage. It has been analysed that by 2025 the contribution to the UK’s economy will grow
by £12 billion (Smith and Pickles, 2017).
Contribution to Employment and Creation of job by tourism in the UK
Tourism sector show the largest contribution by the travel industry, the growth rate of
employment by tourism is increasing year by year (Young et al., 2017). The report shows that
directly more than 118 million people get employment through this sector. It was observed in
2017 that more there were almost one in ten jobs were provided by travel and tourism than
other industries like manufacturing and chemical industries (Vanhove, 2017). According to the
data shown in reports, there was highest job creation by tourism in 2015 and after that, the
percentage has declined to some extent but still, it will grow in future according to travel and
tourism survey 2018.
GDP growth in the UK by Travel and Tourism
There was strong growth in 2017 for travel & tourism but after that, the surveys analysed a
slight decrease in the contribution to GDP growth, from 6.2% it has come down by 2.1%. The
domestic travel and visitors export contribution has also declined to a certain percentage from
last year (Council and Green, 2017). There was the GDP growth in the UK by tourism in 2018,
there is the highest contribution of tourism to the GDP of UK by 4.8% in 2018. This shows that
there will be more employment opportunities and other sources will grow because of this
sector as more visitors will visit and they will demand food, clothing, accommodation etc.
Growth in tourism will lead to overall growth of the economy (Lamonica and Mattioli, 2015).
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Increase in visitors export and Investment by travel and tourism in the UK
Visitors export is the main component of contribution to the economy, in 2017 reports says
that it has generated GBP28.6bpn in visitors export and it is likely to grow by 4.2% in coming
years (Cornelissen, 2017). The capital investment is also likely to increase by 4.3% in 2018
(Cornelissen, 2017). Both visitors export and investment will help in economic growth; these
are the main factors in the economy the capital investment lead to the growth of all other
aspects of the country (Council and Green, 2017). The investment represents the aggregate
demand of the country, so if there will be growth in the capital investment then the
productivity and competitiveness will also increase in the long-run (Kim et al., 2018).
The impact on the total economic contribution by Tourism
There are various sectors in the total growth of the economy and these are Direct, Indirect,
Induced and Total contribution. The direct contribution shows the characteristics such as
hotels, airlines, recreation services, entertainment and others that directly leave an impact on
the economy (Lamonica and Mattioli, 2015.). The indirect contribution shows the government
collection of funds for tourism, the purchase from suppliers impact and so on, this includes all
the activities that are indirectly connected to tourism (Kim et al., 2018). The total contribution
includes the GDP and employment opportunities that directly help the country to grow in many
different ways (Mayer and Vogt, 2016). There is an important activity that impacts for overall
growth is when a number of visitors' ratio increases then there is a slight increase in investment
such as new hotels, new aircraft and this is not an individual’s growth. Investment in such big
plants has an impact on all other sectors also (Young et al., 2017).
Future impact on UK’s economy by Tourism
There was a much greater impact on the economy in 2008 and it is likely to grow in future by
2020, all these data is shown by the Deloitte report and the expected growth rate is 8.8% every
year this is going to increase by 3.5% (Mayer and Vogt, 2016). Future of tourism industry is at its
peak as the population is growing day by day and with the growing world, tourism impact will
be much higher than today (Lamonica and Mattioli, 2015). Not only tourism will have an impact
on GDP but it will also have an impact on other factors.
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Long-term growth of the economy by tourism
The forecast of long term growth of the economy from the year 2017-2027, direct contribution
to GDP is 2.2, Total contribution to GDP is 2.3, direct contribution to employment is 1.1 and
Total contribution to employment is also 1.1. These contributions are almost at top five ranking
in the world and this will lead the UK's economy at the highest rank. In the long run, the
economy will lead to educational growth as the taxes paid by tourism are generally used by the
government for the education system and this will lead to overall growth because education is
the base for every sector (Graham, et al., 2016). Tourism funds also help in the infrastructure
growth as infrastructure development attracts more tourists to the country (Young et al., 2017).
The local art also has many opportunities in the tourism sector as tourists get attracted towards
art and this is a very attractive way of entertainment for tourists.
Impact of heritage tourism on the UK’s economy
There is a greater impact of heritage tourism in UK’s economy, they contribute directly and
indirectly to the country, there are various heritage trips that are planned for the
entertainment of visitors that help in the economic growth of the UK’s economy (Timothy,
2017). Heritage tourism accounts for almost the largest contribution in London its contribution
is 5.7 billion of gross value added and the total economic contribution to the economy is 2%.
Thus heritage tourism also plays a major role in overall contribution from the tourism sector to
economy (Timothy, 2017). Heritage tourism is a very important part of the UK’s economy; the
following data proves this statement to be true as in 2015 there were total 192 trips planned
for the UK’s heritage culture (SECTOR, 2015). This proves that heritage tourism also contribute
a major part as there is no downfall during these years in the heritage tourism (Timothy, 2017).
The tourism industry can be utilised to its full potential for contributing to
UK’s economy
The competitive tourism industry of the world has given a challenge to UK’s economy; there
are various ways through which the economy can change and use its potential of heritage,
social and cultural tourism (Graham et al., 2016).
 There is a need to increase public funding with greater effectiveness
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 The quality and tourism services skill still needs improvement
 Achievement of public benefit requires more public funding
 There is a need to improve sustainability in the tourism industry
Thus these points will help the tourism industry to grow and achieve a competitive position
in the global market (Dwyer, 2018). These points should not be ignored as they will help in
the improvement of the tourism sector and they will lead to an increase in UK's GDP (Dwyer,
2018).
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CONCLUSION
Thus it is concluded that tourism has a positive impact on the UK's economy, moreover, the
employment has a much higher impact than other sectors. Tourism and travel also help the
government to solve the problem of Government by contributing a major part to GDP; the
contribution is mainly divided into three parts that are Direct, Indirect and Induced activities
from the Tourism industry. The job creation is one out of ten jobs provided overall at the global
level. In the recent coming years, the growth rate of tourism is expected to grow at a much
faster rate because the Tourism industry is the main component of modern life. And the
benefits related to travel and tourism will have a great impact on the overall growth of the
economy. The tourism industry is a service sector industry; hence it is more labour intensive
and because of this reason increase in the Tourism sector will lead to an increase in
employment and job creation.
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REFERENCES
Cornelissen, S., 2017. The global tourism system: Governance, development and lessons from
South Africa. Routledge.
Council, T.I. and Green, B., 2017. Tourism industry council.
Davidson, L. and Sahli, M., 2015. Foreign direct investment in tourism, poverty alleviation, and
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Tourism, 23(2), pp.167-187.
De Vita, G. and Kyaw, K.S., 2017. Tourism specialization, absorptive capacity, and economic
growth. Journal of Travel Research, 56(4), pp.423-435.
Dwyer, L., 2018. Future economic development in tourism. Strategic Management in Tourism,
CABI Tourism Texts, p.30.
Graham, B., Ashworth, G. and Tunbridge, J., 2016. Geography of heritage: Power, culture and
economy. Routledge.
Harcombe, D., 2015. The economic impacts of tourism.
Kim, J., Lee, C.K. and Mjelde, J.W., 2018. Impact of economic policy on international tourism
demand: The case of Abenomics. Current Issues in Tourism, 21(16), pp.1912-1929.
Lamonica, G.R. and Mattioli, E., 2015. Research Note: The Impact of the Tourism Industry on the
World's Largest Economies—An Input-Output Analysis. Tourism Economics, 21(2), pp.419-426.
Mayer, M. and Vogt, L., 2016. Economic effects of tourism and its influencing factors. Zeitschrift
für Tourismuswissenschaft, 8(2), pp.169-198.
SECTOR, H., 2015. SHARING ECONOMY.
Smith, A. and Pickles, J., 2017. Technologies of transition: Foreign investment and the (re-)
articulation of East Central Europe into the global economy. In Foreign direct investment and
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regional development in East Central Europe and the former Soviet Union (pp. 59-76).
Routledge.
Timothy, D.J., 2017. Managing heritage and cultural tourism resources: Critical Essays, Volume
One. Routledge.
Vanhove, N., 2017. The Economics of Tourism Destinations: Theory and Practice. Routledge.
Young, S., Hood, N. and Hamill, J., 2017. Foreign multinationals and the British economy: Impact
and policy. Routledge.
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