A new independent report by Oxford Economics, conducted on behalf of business group Logistics UK, has found that targeted government investment, measures to improve the flow of goods across borders, and close cooperation between the government and the logistics sector, could boost GDP by £3.9 billion per annum by 2030.
The report, titled ‘Logistics: Delivering a solution to the UK’s productivity puzzle’, outlines how the ability of UK’s logistics system to support greater competition and efficiency in the UK economy is being held back by challenges caused by border friction and a lack of investment in national infrastructure, innovation and skills – which, if addressed, could also result in an increase in annual household disposable income.
Commenting on the findings of the report, David Wells, Chief Executive of Logistics UK, said:
“The UK’s economy faces a productivity challenge at present, but logistics can be a big part of the solution. This report, conducted on our behalf by Oxford Economics, emphasises how improving the productivity of the logistics sector, one of the UK’s most significant economic contributors, would have a positive impact on the whole economy. However, the findings also suggest that reversing the UK’s decline in productivity and delivering these gains is beyond the control of industry operators alone and will take concerted effort and investment by government.
“To ensure that the nation’s decline in productivity is addressed, it is imperative that government works with the sector to establish a cross-Whitehall Logistics Productivity Forum, to maximise the benefits that this sector can deliver to the whole economy.” As Logistics UK points out, the United Kingdom is currently in joint 19th position in the World Bank logistics rankings. This represents something of a substantial drop from an average ranking of 6th between 2012 and 2018. The report outlines how a return to the top ten would unlock a significant boost in GDP through productivity gains.
As Mr Wells continues, this would not only result in an approximate £80 per annum increase to the annual income of the UK’s 30 million households – a £2.3 billion boost to domestic budgets by 2030 – but could also raise enough in additional taxation to finance the annual salaries of more than 20,000 nurses. If the UK was to become a global leader in logistics, this benefit would be doubled to £7.9 billion a year.
“To deliver the gains outlined in this report, the logistics sector requires government to work in strategic partnership with the private sector to deliver improved infrastructure, reduce friction at the country’s borders to boost trade, resolve skills gaps and invest in innovation to drive efficiency,” added Wells.
The new analysis also highlights that, while there would be a significant economic benefit for the UK from addressing these challenges to close the gap with other nations, this must be achieved alongside delivering the transition to a green economy.
